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CLOB investors set up legal fund to sue KL exchange

SINGAPORE: Hundreds of investors fed up with months of wrangling over $4 billion worth of frozen shares met in Singapore on Saturday to discuss whether to take legal action against the Kuala Lumpur stock exchange.

Officials with the Securities Investors Association (Singapore) (SIAS) said they were setting up a legal fund and seeking advice from lawyers on the best course of action to take against the exchange to free up the shares or get the money back.

The SIAS represents 50,000 of the 172,000 investors, mainly Singpaoreans, whose shares in Malaysian firms were frozen on Singapore's over-the-counter market or Central Limit Order Book (CLOB) after Malaysia imposed capital controls in September 1998.

"Today is the turning point in our CLOB saga. As far as CLOB investors are concerned, we have waited enough," SIAS president David Gerald told some 800 members in the meeting held at a local hotel.

"We formed this association to resist the sharks and prevent people from bullying us. Individually we can be bullied, but together we can't be bullied," he said to loud applause from the crowd of mostly middle-aged men. Gerald said he could not estimate how much money would be collected in the legal fund, but said it could be used by a member or a group of members to sue the KLSE or its subsidiaries to release the shares.

Gerald told the investors he hoped to give them more details on the legal options available within a few weeks.

Many put up their hands when he later asked if they wanted to take legal action, though several expressed concern that it would draw out the dispute even more.

Gerald said legal action in Malaysia could take months or even years to be resolved. But he also reminded them SIAS could only advise them of their legal rights and would not stop them if they decided to take up one of the seven private offers to buy them out at discounts or for a fee.

The SIAS would also urge the Singapore government to file a complaint with the World Trade Organisation of unfair trade practice by Malaysia over the issue, Gerald said.

Singapore Prime Minister Goh Chok Tong said in January the Singapore would take the dispute to the WTO is no solution could be reached bilaterally. Malaysian politicians said Singapore had no case.

The KLSE's Securities Clearing Automated Network Services Sdn Bhd (SCANS) in September 1998 signed an agreement with Singapore's Central Depository Pte Ltd on the migration of the shares, which could be a starting point for the suit, Gerald said.

"It could on SCANS, it could be public law or on constitutional grounds, we will wait for the lawyers' advice," he said.-Reuters