THE Securities and Futures Commission (SFC) investigation of Standard Chartered Securities unearthed incidences of naked opportunism practised by individuals who knew exactly how to play the game. The malpractices took place between July 1991 and March 1993. In one instance of wheeling and dealing a broker lent $107 million to directors of Yanion, a component manufacturer, to support its $750 million flotation. In another case the brokerage allowed a company owned by one of its sales directors to sub-underwrite 10 per cent of an initial public offering (IPO) and provide credit lines to enable it to support the company's share price after the flotation. An ex-Standard Chartered broker disclosed that each person involved in such a deal could take a share of up to $500,000 for each IPO depending on the size of the issue and the market situation. Last year, Standard Chartered Asia handled more IPO issues than any other merchant bank in Hong Kong. In terms of the value of issues handled, it ranked third. The bank participated in 31 IPOs and sponsored five of them. This year, following revelations from SFC investigations, Standard Chartered is under a temporary ban on dealing with new issues. The former broker from Standard Chartered said the practice of dividing spoils from new share issues was not unusual among local brokerages. Even IPOs can offer opportunities for the unscrupulous to make profit by misleading the general public. Senior management can provide credit facilities to enable major shareholders to subscribe for their own new shares. A huge over-subscription ratio can be obtained using this method. Under present rules, any share subscription by a company's major shareholder must be disclosed to the authorities. The share disclosure can reflect the liquidity of the shares to the public. In addition, brokers could paint a rosy but misleading picture on the future prospects for a particular stock given the huge subscription. Investors buy in the belief they can earn money from the investment. However, a large number of shares will be sold in the first few days of trading. At the end of the day, investors will lose their money as the stock's high price cannot be sustained - because it is artificial. Brokers said that the reform of the local securities market with regard to discipline and ethics had been slow. They suggested severe punishments could discourage such malpractices in the market. Chairman of Standard Chartered Malcolm Williamson said: ''Hong Kong was not a highly regulated market until recently, and when you have a total upgrade of ethics, people can get caught out.'' Early last week, the SFC publicly censored Standard Chartered over trading malpractices. Following the SFC's public censorship, the Stock Exchange of Hong Kong announced its own official probe into the affairs of Standard Chartered Securities and Standard Chartered Asia (SCA) last Friday. The exchange will also investigate whether the merchant banking arm, SCA should also banned from underwriting or sponsoring IPOs. Only the brokerage received a ban from involvement in IPOs - for nine months - when the SFC released the investigation on last Wednesday. Technically, Standard Chartered Asia is not affected by the ban and could bring new listings to market if it went through another broker. However, the exchange is thought to be concerned by the apparent loophole created by the SFC's findings.