Lawyer Gurdial Singh Nijar said civil suits filed under Section 90A(5) of the Securities Industries Act 1983 against perpetrators of insider trading are in effect criminal prosecutions designed to punish the defendant.
He said those found guilty of insider trading under Section 89E(4) of the Act can be fined up to RM1 million and face a jail term of up to 10 years.
“For the civil recovery, the law empowers the Securities Commission (SC) to claim from insiders a sum of three times the sum purportedly gained, a civil penalty up to RM1 million, and impose additional orders such as barring them from directorships for a period of time.
“When the High Court allowed SC’s lawsuit, the court said it had considered mitigating factors before making orders against my client. This shows that the recovery lawsuit was also a prosecution,” said Gurdial.
The lawyer was representing fellow lawyer E Sreesanthan who is seeking to set aside a Court of Appeal ruling that held him liable for insider trading in Worldwide Holdings Bhd shares in 2006.
Sreesanthan was ordered to pay RM1.99 million – three times the sum he gained – and an additional RM1 million in civil penalties.
He was also barred from acting as a director of public-listed companies for 10 years, effective November 2020.
Earlier this year, another apex court bench granted Sreesanthan’s bid to pursue his appeal against the Court of Appeal’s decision.
Gurdial said the Federal Constitution does not limit the AG’s powers to only commence or discontinue criminal proceedings.
“This civil recovery lawsuit is akin to punishing an insider and serves as a deterrent (to others). So his (the AG’s) powers can be extended to civil proceedings,” he added.
Justice Hasnah Hashim, who chaired the panel, then adjourned the hearing to another date to be fixed.
Other judges who sat with her were Justices Abdul Karim Abdul Jalil and Vazeer Alam Mydin Meera.
The court also ordered the government, represented by senior federal counsel Shamsul Bolhassan, to file submissions by the end of this month to address whether the AG’s consent is necessary.