Malaysia legislation
Section 49
Section 49
Specific duties of fund managers of public funds
(a)
ensure that a written agreement is entered into with each client before transactions are carried out on behalf of a client;
(b)
understand each client’s investment objectives, instructions, risk profile and investment restrictions, where applicable, which shall be reassessed and updated at least annually;
(c)
exercise diligence and thoroughness in, and have reasonable and adequate basis for, preparing the investment policy or investment recommendation;
(d)
obtain each client’s approval for the investment policy or investment recommendation prior to its implementation;
Act 704
(e)
provide each client with full and accurate information in order to make an informed investment decision when approving the investment policy or investment recommendation;
(f)
avoid any misrepresentation in any investment policy or investment recommendation; and
(g)
ensure that sufficient monies and properties are available in the client’s account to carry out transactions.
(2)
A written agreement referred to in paragraph (1)(a) shall cover amongst others, the following areas:
(a)
the client’s investment objectives, instructions, risk profile and investment restrictions;
(b)
notification of any significant change to the investment policy or investment recommendation;
(c)
mode and manner of reporting to client;
(d)
clear authorization of discretionary management;
(e)
frequency of written report for the performance and review of the client’s monies or properties against an appropriate benchmark;
(f)
amount of fees and charges to be paid by the client;
(g)
the fund manager’s intention to receive, or practice of receiving, soft commission;
(h)
details of the custodian arrangement; and
(i)
such other matters as may be specified by the Authority from time to time.
(3)
A fund manager who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding three years or to both.
Labuan Financial Services and Securities 67
Duty to segregate client’s assets