Updates on Criminal Prosecution in 2018

No. Nature of Offence Offender(s) Facts of Case Date Charged
Criminal Prosecution Initiated – Persons Charged
1. Insider trading Tan Giap How (“Tan”) Tan was charged under section 188(3)(a) of the CMSA for allegedly having communicated material non-public information to one Ng Ee Fang between 25 September 2011 and 20 October 2011. The material non-public information was in relation to the proposed take-over offer by MBM Resources Berhad to acquire all voting shares and outstanding warrants in Hirotako Holdings Berhad. Tan was charged on 13 March 2018.
2. Insider trading Ng Ee Fang (“Ng”) Ng was charged with four counts of insider trading under section 188(2)(a) of the CMSA. She is alleged to have acquired 1,000,000 units of Hirotako Holdings Berhad (“Hirotako”) shares between 14 October 2011 and 20 October 2011 while in possession of material non-public information in relation to the proposed take-over offer by MBM Resources Berhad to acquire all voting shares and outstanding warrants in Hirotako. Ng was charged on 13 March 2018.
3. Allowing a person who is not an authorised nominee of a deposited security to effect dealings in respect of the deposited security Daniel Yong Chen-I (“Daniel”) Daniel was charged under section 29A of the Securities Industry (Central Depositories) Act 1991 (SICDA). Daniel, who holds an account at CIMB Investment Bank Berhad, is alleged to have allowed one Ng Ee Fang to effect the acquisition of 1,000,000 units of Hirotako Holdings Berhad shares between 14 October 2011 and 20 October 2011. Daniel was charged on 13 March 2018
4. Insider trading A.F.M Shafiqul Hafiz (“Shafiqul”) Shafiqul was charged under section 188(3)(a) of the CMSA for having communicated to one Harjit Singh a/l Gurdev Singh between 22 March 2009 and 6 April 2009 material non-public information in relation to the proposed privatisation of Johor Land Bhd (“JLand”) via a Voluntary General Offer at a price of RM1.55 per share. Shafiqul was charged on 22 February 2018.
5. Insider trading Harjit Singh a/l Gurdev Singh (“Harjit”) Harjit was charged with three counts of insider trading under section 188(2)(a) of the CMSA. He is alleged to have acquired 346,500 units of Johor Land Bhd (“JLand”) shares between 23 March 2009 and 6 April 2009 while in possession of material non-public information in relation to the proposed privatisation of JLand via a Voluntary General Offer at a price of RM1.55 per share. Harjit was charged on 22 February 2018.
6. Insider trading Mohd Nor Bin Abdul Wahid (‘Nor’) Nor was charged with one count of insider trading under section 188(2)(a) of the CMSA. He is alleged to have acquired 500,000 units of Three-A Resources Berhad shares on 5 October 2009 while in possession of inside information in relation to the proposed collective venture between the businesses of Three-A Resources Berhad and Wilmar International Limited. Nor was charged on 13 February 2018.
7. Allowing a person who is not an authorised nominee of a deposited security to effect dealings in respect of the deposited security Azuzay Bin Zamani (‘Azuzay’) Azuzay was charged under section 29A of the Securities Industry (Central Depositories) Act 1991 (SICDA). Azuzay, who holds an account at OSK Investment Bank Berhad, is alleged to have allowed Mohd Nor Bin Abdul Wahid to effect the acquisition of 500,000 units of Three-A Resources Berhad shares on 5 October 2009. Azuzay was charged on 13 February 2018.
8. Engaged in an act which operated as a fraud in connection with the purchase of securities Ismail bin Basir Ismail was charged under section 87A(b) of the Securities Industry Act 1983 (SIA) and section 179(b) of the Capital Markets Services Act 2007 (CMSA). Between August 2007 and November 2008, Ismail was alleged to have defrauded Koperasi Pelaburan Pekerja-Pekerja Proton Bhd (“KOPRO”) of its investments of RM350,000 for the purchase of securities. Ismail was also alleged to have represented to KOPRO that he was a remisier, when in fact he was never licensed by the SC. Ismail was charged on 16 January 2018
Outcome of Criminal Prosecution Initiated – Constitutional Challenge
1. Insider Trading Sreesanthan a/l Eliathambhy Sreesanthan was charged with seven counts of insider trading under section 188(2)(a) of the Capital Markets and Services Act (CMSA) and section 89E(2)(a) of the Securities Industry Act (SIA). He was alleged to have traded in the shares of four public listed companies while in possession of inside information relating to various corporate exercises, details of which are stated below:

  • Acquisition of Sime Darby Berhad’s shares while in possession of the proposed acquisition by Synergy Drive of companies within the Sime Darby, Guthrie and Golden Hope groups.
  • Acquisition of Maxis Communication Bhd’s shares while in possession of proposed privatisation of Maxis.
  • Acquisition of UEM World Berhad’s shares while in possession of the corporate restructuring exercise of the UEM group.
  • Acquisition of VADS Berhad’s shares while in possession of proposed privatisation of VADS.

 

Sreesanthan was charged on 20 July 2012 with seven counts of insider trading.

In September 2012, before the commencement of the trial, Sreesanthan filed an application under section 30 of the Courts of Judicature Act 1964 (“CJA”) to refer 10 constitutional questions to the High Court.

In December 2012, the Sessions Court allowed Sreesanthan’s application and granted a stay of proceedings.

In November 2013, the High Court dismissed the application on the basis that there was no merit in the application.

Sreesanthan filed an appeal to the Court of Appeal and in September 2014, the Court of Appeal referred 3 constitutional questions to the Federal Court without hearing the merits of the appeal.

In May 2015, the Federal Court remitted the case to the Court of Appeal to hear the merits of the case on the ground of lack of jurisdiction to hear a case referred by the Court of Appeal.

In September 2016, following the decision of Gan Boon Aun v Public Prosecutor [2016] 4 MLJ 265 where it was held that the High Court should not hear a reference under section 30 of the CJA, Sreesanthan filed an application to the Federal Court to rescind the order of the Federal Court in May 2015, to set aside the order of the High Court in November 2013 and other appropriate consequential directions.

In January 2017, the Federal Court allowed Sreesanthan’s application and ordered the matter to be remitted to the High Court to consider, if any, and state the question which in his/her opinion has arisen as to the effect of the provision of the constitution in the form of special case and transmit the same to the Federal Court for determination pursuant to section 84(3) and 84(4) of the CJA.

In June 2017, the High Court referred one constitutional question to the Federal Court for determination which is “Whether sections 128 and 134 of the SCA are inconsistent with Articles 5(1) and 8(1) of the Federal Constitution”. The High Court granted a stay of proceedings at the Sessions Court pending the decision of the Federal Court.

In March 2018, before hearing of the special case, the Prosecution had raised a preliminary objection that there was no constitutional question to be answered by the Federal Court. After hearing both parties, the Federal Court unanimously upheld the preliminary objection and ordered the matter to be remitted to the Sessions Court for the commencement of the trial.

Outcome of Criminal Trials & Appeals
1. Insider trading Tan Bee Hong Tan BH was charged with insider trading under s188(2)(a) CMSA as she is alleged to have disposed of 350,000 APL Industries Berhad (APLI) shares on 31 October 2007 while in possession of inside information in relation to the audit adjustments proposed by APLI’s auditors which would result in APLI reporting a higher loss for the financial year ended  30 June 2007, as compared to the previously reported unaudited 4th quarter results for the same financial year and that APLI would be classified as an affected issuer pursuant to the Listing Requirements of Bursa Malaysia Securities Bhd and Practice Note 17/2005. Tan BH was charged on 15 December 2014. On 9 August 2018, Tan BH was convicted by the Sessions Court and was sentenced to 5 years’ imprisonment and RM7 million fine.
2. Insider trading Tan Bee Geok Tan BG was charged under s188(3)(a) CMSA for having communicated to Tan Bee Hong between 23 to 31 October 2007 inside information in relation to the audit adjustments proposed by APLI’s auditors which would result in APLI reporting a higher loss for the financial year ended  30 June 2007, as compared to the previously reported unaudited 4th quarter results for the same financial year and that APLI would be classified as an affected issuer pursuant to the Listing Requirements of Bursa Malaysia Securities Bhd and Practice Note 17/2005. Tan BG was charged on 15 December 2014. On 9 August 2018, Tan BG was convicted by the Sessions Court and was sentenced to 5 years’ imprisonment and RM7 million fine.
3. Failing to appear before an SC Investigating Officer in connection with an investigation Chok Chew Lan (‘Chok’) Chok was charged with 2 counts of failing to appear before an SC Investigating Officer to be examined orally on 5 September 2017 and 19 September 2017 under section 134(5) of the Securities Commission Malaysia Act 1993. Chok was charged at the Kuala Lumpur Sessions Court on 24 October 2017.

On 30 July 2018, Chok pleaded guilty to all charges and was sentenced to a fine of RM35,000 (in default, 3 months imprisonment)  for each charge.

4. Prohibited conduct of person in possession of inside information Dato’ Lim Kim Chuan (“Lim KC”)

Tay Hup Choon (“Tay HC”)

Theng Boon Cheng (“Theng BC”)

Lim KC was charged with 11 charges under section 188(2)(a) of the CMSA for acquiring M3nergy Berhad (M3nergy) shares between 6 August 2008 to 11 September 2008 while in possession of inside information. Lim KC was the CEO and Director of Melewar Industry Group Berhad and was also a Director of M3nergy at the material time.

The inside information was in relation to the proposed take-over offer by Melewar (BVI) Ltd (Melewar) to acquire M3nergy which was announced to Bursa Malaysia on 12 September 2008. The shares were acquired by Lim KC through trading accounts belonging to 2 other individuals.

Tay HC was charged with 9 charges of abetting Lim KC in the commission of the offences under section 370(c) read together with section 188(2)(a) of the CMSA. Tay HC is one of the account holders of the trading account used by Lim KC to acquire the M3nergy shares. Tay is Lim KC’s brother-in-law.

Theng BC was charged with 11 charges of abetting Lim KC in the commission of the offences under section 370(c) read together with section 188(2)(a) of the CMSA. Theng BC was the remisier who executed the trades of the M3nergy shares for Lim KC.

Lim KC, Tay HC and Theng BC were charged in the Sessions Court on 24 November 2015. On 30 April 2018, the Sessions Court acquitted and discharged Lim KM, Tay HC and Theng BC without calling for their defence.

On 3 May 2018, the Prosecution filed an appeal to the High Court against the acquittal.

5. Submission of misleading information to SC in connection with a proposal Dato’ Lim Kim Ming (“Lim KM”) Lim KM was charged with having committed an offence under section 32B(1)(a)(aa) read together with section 138(2) of the SCA when GP Ocean Food Berhad (GP Ocean) submitted  through Alliance Merchant Bank Bhd, misleading information to the SC contained in:

  • Gropoint Fisheries Sdn Bhd’s Directors’ Report and Audited Financial Statements 31 January 2006; and
  • Gropoint Seafood Industries Sdn Bhd’s ‘Directors’ Report and Audited Financial Statements 31 January 2006.

Gropoint Fisheries Sdn Bhd and Gropoint Seafood Industries Sdn Bhd were at the material time subsidiaries of GP Ocean. The information was required to be submitted to the SC in connection with GP Ocean’s proposal for listing on the Main Board of Bursa Malaysia Securities Bhd.

Lim KM was charged in the Sessions Court on 22 May 2007. On 6 January 2011, the Sessions Court acquitted and discharged him. The prosecution then appealed to the High Court, which on 14 February 2017, overturned the acquittal and ordered Lim KM to enter his defence on the charge against him.

On 28 March 2018, the Sessions Court acquitted Lim KM at the end of the Defence’s case.

On 9 April 2018, the Prosecution filed an appeal to the High Court against the acquittal.

6. Submission of misleading information to SC in connection with a proposal Lim Kim Hai (“Lim KH”) Lim KH was charged with having committed an offence under section 32B(1)(a)(aa) read together with section 138(2) of the SCA when GP Ocean submitted through Alliance Merchant Bank Bhd, misleading information to the  SC contained in GP Ocean’s Directors’ Report and Financial Statements 31 January 2006.This information was required to be submitted to the SC in connection with GP Ocean’s proposal for listing on the Main Board of Bursa Malaysia Securities Bhd. Lim KH was charged in the Sessions Court on 22 May 2007.On 6 January 2011, the Sessions Court acquitted and discharged him. The prosecution then appealed to the High Court, which on 14 February 2017, overturned the acquittal and ordered Lim KH to enter his defence on the charge against him.

On 28 March 2018, the Sessions Court acquitted Lim KH at the end of the Defence’s case.

On 9 April 2018, the Prosecution filed an appeal to the High Court against the acquittal.

7. Submission of misleading information to SC in connection with a proposal Lee Sin Teck (“Lee”) Lee was charged with having committed an offence under section 32B(1)(a)(aa) read together with section 138(2) of the SCA when GP Ocean submitted through Alliance Merchant Bank Bhd, misleading information to the SC contained in GP Ocean’s Directors’ Report and Financial Statements 31 January 2006.This information was required to be submitted to the SC in connection with GP Ocean’s proposal for listing on the Main Board of Bursa Malaysia Securities Bhd. Lee was charged in the Sessions Court on 18 April 2007On 6 January 2011, the Sessions Court acquitted and discharged him. The prosecution then appealed to the High Court, which on 14 February 2017, overturned the acquittal and ordered Lee to enter his defence on the charge against him.

On 28 March 2018, the Sessions Court acquitted Lee at the end of the Defence’s case.

On 9 April 2018, the Prosecution filed an appeal to the High Court against the acquittal.

8. Submission of misleading information to SC in connection with a proposal Tan Siok Wan (“Tan”) Tan was charged with having committed an offence under section 32B(1)(a)(aa) read together with section 138(2) of the SCA when GP Ocean submitted through Alliance Merchant Bank Bhd, misleading information to the SC  contained in a list titled “GP Ocean Food Berhad Group Top Ten Customer”. This information was required to be submitted to the SC in connection with GP Ocean’s proposal for listing on the Main Board of Bursa Malaysia Securities Bhd. Tan was charged in the Sessions Court on 18 April 2007. On 6 January 2011, the Sessions Court acquitted and discharged her. The prosecution had then appealed to the High Court, which on 14 February 2017, overturned the acquittal and ordered Tan to enter her defence on the charge against her.

On 28 March 2018, the Sessions Court acquitted Tan at the end of the Defence’s case.

On 9 April 2018, the Prosecution filed an appeal to the High Court against the acquittal.

9. Criminal Breach of Trust

(s.409 Penal Code)

Alan Rajendram a/l Jeya Rajendram (‘Alan Rajendram’) Alan Rajendram a/l Jeya Rajendram, a former director of LFE Corporation Berhad (LFE), was charged on 24 June 2010 with two charges for Criminal Breach of Trust (CBT) amounting to RM18.99 million. The charges for CBT were earlier tried together with four other charges under securities laws for furnishing false information to the stock exchange pertaining to LFE’s operating expenses under section 122B(b)(bb) of the Securities Industry Act 1983 and section 369(b)(B) of the Capital Markets and Services Act 2007.

For the CBT charges, Alan Rajendram was alleged to have utilised RM18.99 million of funds belonging to LFE which was meant to be used for the working capital of LFE’s wholly owned subsidiary, LFE International Limited. Instead, Alan Rajendram had used those funds to finance his personal subscription of shares in LFE and to repay his corporate debts.

On 10 May 2012, the Sessions Court acquitted Alan Rajendram of the 2 CBT charges at the end of the prosecution’s case. The prosecution appealed to the High Court. On 21 January 2016, the High Court affirmed the acquittal and the prosecution appealed to the Court of Appeal. On 3 November 2016, the Court of Appeal reversed the acquittal and ordered for Alan Rajendram to enter his defence.

On 10 April 2018, Alan Rajendram pleaded guilty to the CBT charges at the Sessions Court and was sentenced to 3 years imprisonment.

10. Misleading statements in connection with the purchase of securities

[s.87A (c) of the SIA 1983]

Wahid Ali Kassim Ali Wahid Ali, a director of Aiwanna Manage Assets Sdn Bhd (Aiwanna) was charged on 10 October 2005 with three counts of omitting to state a material fact, pertaining to the investment of Aiwanna’s client, Eastern Pacific Industrial Corporation Bhd (EPIC) whereby the material fact was necessary to make the statement of accounts issued to EPIC, not misleading. The High Court had on 14 January 2013 dismissed Wahid Ali’s appeal against his conviction and sentence imposed by the Sessions Court on 30 June 2009. Wahid Ali had then filed an appeal to the Court of Appeal. On 14 May 2015, the Court of Appeal remitted the case to the High Court for a re-hearing of the appeal.

On 27 May 2016 at the re-hearing of the appeal, the High Court confirmed the conviction for all 3 charges. For each charge, he was sentenced to one year imprisonment term and a fine of RM1 million (in default of the total RM3 million fine, 1 year jail). The imprisonment term was ordered to be served concurrently. The High Court allowed for Wahid Ali’s application to stay the execution of the sentences pending appeal to the Court of Appeal.

On 13 April 2018, the Court of Appeal allowed Wahid Ali’s appeal and set aside the conviction by the Sessions Court and the High Court.

11. Insider trading Goh Keng Huat Goh was charged with 10 counts of insider trading under section 89E(2)(a) of the Securities Industry Act 1983 (SIA). He is alleged to have acquired 851,600 units of Road Builder Holdings (M) Berhad (“RBH”) shares through the accounts of Wee Siew Ling between 4 September 2006 and 16 October 2006 while in possession of inside information. The SC alleged that the inside information referred to in the charges related to the proposed acquisition of all assets and liabilities of RBH by IJM Corporation Bhd at a total indicative purchase consideration of approximately RM1.56 billion. On 10 April 2018, Goh pleaded guilty to one charge pursuant to an application for plea bargaining under section 172C of the CPC. Nine of the remaining charges were taken into consideration by the Court.

Goh was sentenced to 6 months imprisonment and fine of RM1 million, in default 6 months imprisonment.

12. Insider trading Wee Siew Ling Wee was charged with 10 counts under section 122C(c) read together with section 89E(2)(a) of the SIA for abetting Goh Keng Huat in acquiring 851,600 units of Road Builder Holdings (M) Berhad (“RBH”) shares through Wee’s accounts between 4 September 2006 and 16 October 2006 while Goh was in possession of inside information. The SC alleged that the inside information referred to in the charges related to the proposed acquisition of all assets and liabilities of RBH by IJM Corporation Bhd at a total indicative purchase consideration of approximately RM1.56 billion. On 10 April 2018, all the charges against Wee were withdrawn following the guilty plea by Goh.
13. Knowingly permitting the submission of false information to the Stock Exchange Alan Rajendram a/l Jeya Rajendram

(‘Alan Rajendram’)

Alan Rajendram a/l Jeya Rajendram, a former director of LFE Corporation Berhad (LFE), was charged on 24 June 2010 with two charges under s.122B(b)(bb) of the SIA and two charges under s.369(b)(B) of the CMSA 2007 for knowingly permitting the furnishing of false statements by LFE to Bursa Malaysia Securities Berhad in relation to LFE’s unaudited financial results for all four quarters for its financial year ended 31 December 2007. The false statements were in relation to fictitious purchases of RM119 million made by LFE International Ltd, a subsidiary of LFE. On 10 October 2012, the Sessions Court convicted Alan Rajendram of all four charges and he was sentenced to a jail term of 12 months and a fine of RM300,000 for each charge. The jail term is to be served concurrently.
On 28 November 2016, Alan Rajendram’s appeal against his conviction and sentence was dismissed by the High Court following which he lodged an appeal to the Court of Appeal.On 23 March 2018, the Court of Appeal dismissed his appeal and Alan Rajendram was ordered to serve his sentence with immediate effect.
14. Engaged in an act which operated as a fraud in connection with the purchase of securities Ismail bin Basir Ismail was charged under section 87A(b) of the Securities Industry Act 1983 (SIA) and section 179(b) of the Capital Markets Services Act 2007 (CMSA). Between August 2007 and November 2008, Ismail was alleged to have defrauded a sum of RM350,000 from Koperasi Pelaburan Pekerja-Pekerja Proton Bhd (“KOPRO”) in connection with the purchase of Proton Holdings Berhad shares. Ismail was also alleged to have represented to KOPRO that he was a remisier, when in fact he was never licensed by the SC. Ismail was charged on 16 January 2018. On 28 February 2018, Ismail pleaded guilty to both charges and sentenced to 1 year imprisonment & RM1 million (in default 6 months imprisonment) for each charge. The jail term is to run concurrently.
15.
  • Holding out as a representative in respect of a regulated activity, namely trading in futures contracts, without holding a Capital Markets Services Representative’s Licence (CMSRL).
  • Carrying on a business in a regulated activity, namely trading in futures contracts, without holding a Capital Markets Services Licence (CMSL).
Zamani bin Hamdan On 28 October 2011, Zamani was charged under Section 59(1) of the Capital Markets and Services Act 2007 for holding himself out as a representative of a CMSL holder to trade in futures contracts without a CMSRL. Zamani was also charged in the alternative for carrying on the business of trading in futures contracts without holding a CMSL, through Rantau Simfoni Sdn Bhd (Rantau Simfoni), an offence under Section 58(1) of the Capital Markets and Services Act 2007, read together with Section 367(1) of the Capital Markets and Services Act 2007.

Zamani was, at the material time, a director of Rantau Simfoni.

On 30 April 2013, Zamani was convicted by the Sessions Court on the alternative charge of carrying on the business of trading in futures contracts without holding a CMSL through his company Rantau Simfoni. The Sessions Court sentenced him to a fine of RM1 million (in default, 1 year jail).

Zamani had filed an appeal against the conviction and sentence on 2 May 2013 while the Prosecution filed an appeal against the sentence on 8 May 2013.

On 19 January 2017, the High Court dismissed Zamani’s appeal against his conviction. The High Court further enhanced the sentence by adding an imprisonment sentence of 2 months and reduced the fine to RM215,000 (in default, four months jail).

The SC has filed an appeal to the Court of Appeal on 2 February 2017 against the sentence meted out by the High Court.

On 30 January 2018, the Court of Appeal struck out the appeal against sentence as the notice of hearing was not able to be served on Zamani despite numerous efforts to locate him by the SC.