FEDERAL COURT DISMISSES LAWYER’S BID TO OVERTURN INSIDER TRADING RULING

PUTRAJAYA, April 8 (Bernama) -- The Federal Court here today upheld the ruling which found lawyer Datuk Sreesanthan Eliathamby liable for insider trading of Worldwide Holdings Berhad shares in 2006 and ordered him to pay RM2.99 million, including a RM1 million civil penalty. 

The total amount comprises RM1,989,402, representing three times the profit gained from the insider trading, in addition to the RM1 million civil penalty.

A three-judge panel led by Chief Judge of Malaya Datuk Seri Hasnah Mohammed Hashim, along with Federal Court judges Datuk Abdul Karim Abdul Jalil and Datuk Vazeer Alam Mydin Meera, dismissed Sreesanthan’s appeal against the rulings of both the High Court and the Court of Appeal.

The court also ordered Sreesanthan to pay RM100,000 in legal costs.

In the court’s unanimous decision, Justice Hasnah said the Securities Commission (SC) was not required to obtain the Attorney-General’s (AG) consent before initiating civil actions against a person for recovery of losses with regard to insider trading offences.

She said that while the AG could apply to intervene in civil actions where public interest was concerned, it was not mandatory for the AG to give his consent to initiate civil actions.

Justice Hasnah stated that the power granted solely to the AG to institute prosecutions under Article 145 (3) of the Federal Constitution did not extend to civil actions brought under Section 90A (5) of the Securities Industries Act (SIA) 1983 for contravention of Section 89E of the same act (now Section 188 of the Capital Markets and Services Act 2007.

“Any civil action constituted under Section 90A (5) SIA does not require consent of the AG and does not render the civil action under the Act and imposition on the sentence unconstitutional,” she said.

She then read out the court’s unanimous decision regarding a question of law whether the AG’s consent was necessary for the SC to commence civil actions for recovery of losses in insider trading cases.

Justice Vazeer, who addressed the other questions of law, said the High Court and Court of Appeal’s findings pertaining to the materiality of inside information were without error, as there was evidence of a price surge of Worldwide Holdings Bhd shares after the announcement of a post-acquisition event.

In November 2020, the High Court found Sreesanthan liable for insider trading in Worldwide Holdings Bhd shares in 2006. He was ordered to pay RM1.99 million to SC, which was three times the profits gained as a result of the insider trading and an additional RM1 million in civil penalty. He was also barred from serving as a director of any listed company for 10 years, effective from Nov 18, 2020.

On Sept 6, 2022, the Court of Appeal dismissed Sreesanthan’s appeal and upheld the decision of the High Court. In April last year, the Federal Court granted him leave to appeal against the ruling.

The SC had initiated the civil action against Sreesanthan, accusing him of acquiring a total of 600,000 Worldwide shares between June 7 and July 11, 2006, while in possession of material non-public information relating to the proposed privatisation of Worldwide by Perbadanan Kemajuan Negeri Selangor. 

At the material time, Sreesanthan was a senior partner at a law firm which was engaged to act as the legal adviser of the proposed privatisation of Worldwide. 

Sreesanthan had already paid the RM2.99 million as well as a total of RM150,000 in legal costs for the proceedings in the High Court and Court of Appeal.

In today’s proceedings, a team of lawyers led by Datuk Dr Gurdial Singh Nijar represented Sreesanthan, while lawyers S.M. Shanmugam, Siew Hui Yi and officers from the SC, Shoba Venu Gopal, K. Mageswary, Daniel Ariff Tung Adib Vincent Tung and Low Wen Zhen appeared for the SC.

Senior Federal Counsels Shamsul Bolhassan and Liew Horng Bin represented the AG, who participated in the proceedings as amicus curiae (friend of the court).

--BERNAMA