PUTRAJAYA, Oct 11 — The Federal Court here today heard that a civil action initiated by the Securities Commission (SC) against a corporate lawyer, E. Sreesanthan, for insider trading was not properly instituted.
Lawyer Datuk Dr Gurdial Singh Nijar argued this was because the SC is required to seek the Attorney-General’s (AG) consent before it can commence civil action against a person.
He said civil recovery lawsuits filed under Section 90A(5) of the Securities Industries Act against insider trading perpetrators have the same effect as criminal prosecutions, as both aimed to impose punishment.
He pointed out that individuals found guilty of insider trading under Section 89E(4) of the same Act can be fined up to RM1 million and face a prison sentence of up to 10 years.
Gurdial, representing Sreesanthan, said for civil recovery, the law empowers SC to claim from insiders a sum of three times purportedly gained, impose a civil penalty of up to RM1 million, and issue additional orders such as prohibiting them from holding directorships for a specified period.
He said Article 145(3) of the Federal Constitution gives the Attorney General the exclusive authority to initiate, conduct or discontinue any proceedings for offences.
He contended that both civil and criminal cases under the Securities Industries Act must be presented for a careful and judicious exercise of the discretion granted to the AG, adding that the civil recovery lawsuits were intended to punish an insider and serve as a deterrent to others.
Gurdial was submitting in Sreesanthan’s appeal before a three-judge panel consisting of Judges Datuk Seri Hasnah Mohammed Hashim, Datuk Abdul Karim Abdul Jalil and Datuk Vazeer Alam Mydin Meera.
Sreesanthan is appealing against the November 2020 High Court’s decision that had found him to have engaged in insider trading of Worldwide Holdings Bhd shares in 2006.
He was ordered to pay RM1.99 million to the SC, which was three times the profits gained as a result of the insider trading and an additional RM1 million in civil penalty.
Sreesanthan was also barred from serving as a director of any listed company for 10 years, starting 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 this year, Sreesanthan obtained leave from the Federal Court to appeal against the decision.
The SC initiated the civil action against Sreesanthan, and accused 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 the Selangor State Development Corporation (PKNS).
At the material time, Sreesanthan was a senior partner at a law firm that was engaged to act as the legal adviser of the proposed privatisation of Worldwide.
Justice Hasnah, who chaired the panel, adjourned the hearing to another date to be fixed.
She also instructed senior federal counsel Shamsul Bolhassan, representing the AG, as amicus curiae to file their submission by the end of this month. — Bernama
