Former Bank Negara Syariah Adviser Faces Securities Charge

Malaysia‘s capital markets have been thrust into the spotlight following charges against several prominent figures, including a well-known Islamic finance scholar. The case, centred on alleged unlicensed securities activities, has raised fresh questions about compliance standards and investor protection in one of Southeast Asia’s most established financial hubs.

At the centre of the case is Tan Sri Dr Mohd Daud Bakar, a recognised authority in Islamic finance and former member of the Syariah Advisory Council of Bank Negara Malaysia. The 62-year-old was charged with abetting unlicensed securities activities. He entered a plea of not guilty before Sessions Court judge Norma Ismail.

According to the charge sheet, Mohd Daud, acting as a representative of Energy Eco Bhd, allegedly assisted AUF MBZ Consortium PLT in carrying out securities activities without the required licence or registration under Malaysias Capital Markets Services Licence framework. The alleged conduct took place at a business premises in Pusat Perniagaan Reef, Rawang, between 14 June 2021 and 9 August 2023.

The charge was brought under Subsection 58(1) of the Capital Markets and Services Act 2007. If convicted, the offence carries severe penalties, including a fine of up to RM10 million, imprisonment of up to ten years, or both. The scale of the potential punishment underlines the seriousness with which regulators treat breaches involving unlicensed trading.

The prosecution, led by Securities Commission deputy public prosecutor Shoba Venu Gobal, informed the court that the charge was technically non-bailable, although judicial discretion could be exercised. The prosecution proposed bail at RM200,000.

In response, defence counsel Mohd Haziq Razali argued that his client faced only a single charge and that bail should serve solely to ensure court attendance rather than act as a punitive measure. The court ultimately set bail at RM50,000 with one surety.

Separate Proceedings Against AUF MBZ Founder

In parallel proceedings, Datuk Seri Mahadi Badrul Zaman, founder of AUF MBZ, faced two counts of conducting illegal securities trading without a licence under the same statutory provision. The 43-year-old pleaded not guilty before both Judge Norma Ismail and Sessions Court judge Azrul Darus in separate hearings.

Mahadi is accused of committing the offences at a residential property in Bayrocks Garden Waterfront Villa, Sunway South Quay, Subang Jaya. The alleged activities are said to have occurred between 14 June 2021 and 15 February 2024.

During the bail hearing, Securities Commission prosecuting officer Danial Imran Nasaruddin urged the court to weigh the broader public interest and the importance of maintaining investor confidence in the securities market. The prosecution proposed bail of RM500,000 for the two cases.

Defence counsel Datuk Mohd Zamri Mohd Idrus maintained that his client had cooperated fully with investigators and presented no risk of absconding. The court was also informed of Mahadis family responsibilities, including caring for a mother undergoing cancer treatment and supporting his in-laws.

After considering submissions from both sides, the courts granted Mahadi bail of RM100,000.

Third Accused Linked to Same Investigation

The investigation also led to charges against businessman Muhamad Iqbal Mohamad, 47, who was accused of abetting AUF MBZ in illegal securities trading in his role as director of QEW Group Bhd.

He allegedly committed the offence at premises in Putra Walk, Taman Pinggiran Putra, Seri Kembangan, between 3 September 2021 and 15 February 2024. Like the others, he pleaded not guilty before Judge Norma Ismail.

Securities Commission prosecuting officer Quek Yiing Huey proposed bail at RM200,000. Defence counsel Nik Mohamed Ikhwan Nik Mahamud sought a lower amount, arguing that his client was not the principal offender and had significant responsibilities, including overseeing 30 employees whose livelihoods depended on the business.

The court fixed bail at RM50,000 with one surety.

All three cases have been scheduled for mention on 10 April.

Wider Implications for the Market

While the legal process is at an early stage, the involvement of a respected Islamic finance scholar has drawn particular attention. Mohd Daud‘s past advisory role at the central bank placed him among influential voices in Malaysia’s Islamic finance framework. The charges do not relate to his work at the central bank, but the reputational impact is significant given his standing in the industry.

Malaysia has long positioned itself as a global leader in Islamic finance and a regional hub for capital markets activity. Regulatory enforcement plays a central role in sustaining that reputation. The Capital Markets and Services Act 2007 provides the legal backbone for licensing, supervision and enforcement within the sector.

Unlicensed securities activities are treated as serious offences because they can expose investors to substantial financial risk. Licensing requirements are designed to ensure that market participants meet minimum standards of governance, financial stability and compliance. Any breach of these safeguards may weaken trust in the system.

The Securities Commissions decision to pursue charges underlines its ongoing focus on market integrity. In recent years, regulators across Asia have stepped up enforcement to deter unauthorised investment schemes and protect retail investors.

For now, the accused remain presumed innocent until proven guilty. The forthcoming court proceedings are likely to be closely watched by both domestic and international observers. Beyond the individuals involved, the case serves as a reminder that regulatory scrutiny in Malaysias financial markets remains firm, regardless of status or standing.