AMMB unit to pay RM4.8m to settle US SEC charges
WASHINGTON, June 27 — A unit of AMMB Holdings Bhd will pay US$1.6 million (RM4.8 million) to settle allegations that it breached its fiduciary duty by charging a US fund for advisory services it never provided.
The Securities and Exchange Commission said yesterday that AMMB Consultant, an investment adviser in Malaysia, charged the fees for roughly a decade. The unit allegedly falsely claimed it was providing advice and research.
The unit is settling the SEC lawsuit, which was filed in a federal court in Washington, DC, without admitting or denying the allegations.
An attorney for the fund adviser was not immediately available for comment.
The case against AMMB Holdings, one of Malaysia’s largest banking groups, is part of a broader inquiry by the SEC’s specialized asset management unit into the investment advisory contract renewal process.
The SEC said that AMMB Consultant, which is based in Kuala Lumpur, served as a sub-adviser to the Malaysia Fund Inc, which invests in Malaysian companies.
The principal adviser to the Malaysia Fund is a unit of Morgan Stanley, which late last year settled related charges over the fee arrangement in question for US$3.3 million.
“We are committed to ensuring that advisers to registered funds adhere to their fiduciary duty with respect to the receipt of compensation,” said Bruce Karpati, the chief of the SEC Enforcement Division’s asset management unit.
The SEC alleged that the AMMB Holdings unit submitted a report to the Malaysia Fund’s board of directors each year claiming it was providing certain services. The services rendered, the SEC said, were actually limited to providing two monthly reports based on publicly available information that was never used or requested.
The SEC also said that AMMB did not adopt policies or controls over its advisory business, despite certifying that such policies were in place.
AMMB’s advisory agreement was terminated in 2008 after SEC examiners starting inquiring about the services it was providing. — Reuters