MAS insider trading, SC settlement questioned

KUALA LUMPUR, April 18 – Reports of possible insider trading involving AirAsia’s co-founder Kamarudin Meranun have come out after the Securities Commission (SC) announced, on April 2, 2019, that he had entered into a settlement with the SC to the sum of RM3,637,252, when he agreed without admission or denial of liability to settle a claim that the SC was proposing to institute against him for acquiring 5,660,000 Malaysia Airlines Berhad (“MAS”) shares between August 1, 2011 and August 5, 2011 through the account of Nor Ashikin Khamis’ and Malizan Mahmood whilst in possession of inside information contrary to section 188(2) of the Capital Markets and Services Act 2007 (“CMSA”).

On April 9, 2019, Abdul Radzim Abdul Rahman and Mohamed Radzif Shamsudin entered into a settlement with the SC in the sum of RM750,000 respectively when they agreed without admission or denial of liability to pay a civil penalty that the SC was proposing to institute against them for acquiring 3,160,000 MAS shares through the account of  Nor Ashikin binti Khamis’ and 2,500,000 MAS shares through the account of Malizan Mahmood respectively between August 1, 2011 and August 5, 2011 whilst in possession of inside information contrary to section 188(2) of the CMSA.

The settlement was reached following letters of demand sent by the SC pursuant to its civil enforcement powers under the securities laws.

The amount paid by Kamarudin is equivalent to three times the difference between the price at which the shares were acquired and the price at which the shares would have been likely to have been acquired at the time of the acquisition, if the information had been generally available. The monies recovered will be applied in accordance with section 201(7) of the CMSA.

The SC had also announced that on April 1, 2019, Terence Wong @ Huang Thar-Rearn entered into a settlement with the SC in the sum of RM573,150.00 when he agreed without admission or denial of liability to settle a claim that the SC was proposing to institute against him for acquiring 800,000 Malaysia Airlines Berhad (“MAS”) shares between July 15, 2011 and July 22, 2011 through the account of Tan Ah Loy @ Tan May Ling whilst in possession of inside information contrary to section 188(2) of the Capital Markets and Services Act 2007 (“CMSA”).

The settlement was reached following a letter of demand sent by the SC pursuant to its civil enforcement powers under the securities laws.

The amount paid by Terence Wong is equivalent to three times the difference between the price at which the shares were acquired and the price at which the shares would have been likely to have been acquired at the time of the acquisition, if the information had been generally available. The monies recovered will be applied in accordance with section 201(7) of the CMSA

Settlement deals confirm insider trading

The settlement deals for everyone involved in the insider trading had brought public backlash on social media with some questioning why they were not charged with criminal offence.

Insider trading offences, under section 188 of the Capital Markets and Services Act 2007 (CMSA), carry a mandatory punishment of imprisonment not exceeding 10 years and a fine of not less than RM1 million.

Ex-MP Wee Choo Keong took to his Facebook to suggest something more sinister behind the deal.

NST reported that some economists have called those involved to leave their posts immediately in order for public confidence to return.

“With the new government that places so much importance on good governance, there should not be any exception. They (corporate officers) have to follow SC’s rules. Those who have been charged with insider trading should set an example and step down, at least for some time.” NST  quoted Asian Strategy and Leadership Institute Centre of Public Policy Studies chairman Tan Sri Ramon Navaratnam.

Political and economic analyst Prof Dr Hoo Ke Ping said those charged with insider trading should be suspended.

“There is this principle that says ‘innocent till found guilty’ but that is not good. Once charged, even though they have not been found guilty, they should be suspended,” he said according to NST.

Other Facebook users have also questioned the move.

SC has history of selective prosecution on insider trading

The SC had proven to be selective in their prosecution over the past few years especially under the reign of previous chairman Tan Sri Ranjit Singh. While some cases were settled out of court and others via civil suits in court, there were some politically motivated charges on politically-linked businessmen where the SC charged them under section 188.

NMT had also previously questioned the SC’s selective prosecutions in helping the Barisan Nasional government putting fears to supporters of the then opposition parties. Some of the charges were seen to be politically-motivated.

Dato’ Vincent Leong Jee Wai was charged in May 2017 for insider trading of shares of Maxbiz Corporation Berhad (Maxbiz) between 2010 and 2011. Vincent was seen to have been a supporter of then opposition coalition, Pakatan Harapan. The case had since been dropped by the prosecution in December 2018 with Attorney-General Tommy Thomas finding little grounds for the charges. The judge on the case was Judge Zulqarnain Hassan.

Youth and Sports Minister Syed Saddiq Syed Abdul Rahman had previously spoken out on Astro Awani about the directors of Supermax, namely Dato’ Sri Stanley Thai and wife Datin Sri Cheryl Tan having been prosecuted with insider trading by the SC as part of the former Barisan Nasional government’s culture of fear against supporting opposition parties.

Stanley had openly supported the then Pakatan Rakyat opposition coalition prior to the 13th General Election in May 2013. The couple are appealing against the two court decisions. The judge on both cases was also Judge Zulqarnain Hassan.

Kencana Petroleum Bhd Datuk Yeow Kheng Chew also faced prosecution by the SC then although the case was later dropped by the AG’s office. Yeow, who is also known as KC Yeow, is a former partner of Prime Minister Tun Dr Mahathir Mohamad’s eldest son, Mokhzani. The judge on that case too was Zulqarnain Hassan.

Ranjit has since retired in October 2018 and been replaced by Datuk Syed Zaid Albar, brother to former Umno home minister Tan Sri Syed Hamid  Albar, who left Umno to join Mahathir’s Parti Pribumi Bersatu Malaysia after the 14th General Election last year.

It will be interesting to see whether Ranjit will ever be brought under the microscope for his role in helping the corrupt administration of former prime minister Datuk Seri Najib Razak.

One judge in many politically-linked cases

Judge Zulqarnain Hassan who was the judge for the four above-mentioned cases, was also the judge for other politically-linked cases, including PKR Vice-President Rafizi Ramli’s OSA charge related to exposing and having possession of a 1MDB document.

He was also the judge who sentenced PKR leader Tian Chua to three months jail and a fine of RM1,800 over a speech alleged to have been of a seditious nature which the former Batu MP had made in 2013.

Current Pakatan Harapan lawmakers, including Subang Jaya MP Wong Chen and Health Minister Dr Dzulkefly Ahmad, who is also Kuala Selangor MP, had previously stood in solidarity against Zulqarnain’s decisions, especially over Rafizi Ramli’s conviction.

Coming soon, more insider trading exposes and reports on the issue of questionable judges under the BN government led by Najib Razak on New Malaysia Times.

–NMT