The Court of Appeal today ruled in favour of the Securities Commission Malaysia (SC) and affirmed the High Court’s judgment, which found a former Executive Director of Patimas Computers Berhad liable for insider trading.

The High Court had in 2022 found Dato’ Ng Back Heang (Ng) liable for insider trading under section 188(2)(a) of the Capital Markets and Services Act 2007 (CMSA).

In its decision today, Justices Datuk Ravinthran a/l N. Paramaguru, Dato’ Dr. Choo Kah Sing and Dato’ Nadzarin bin Wok Nordin unanimously dismissed Ng’s appeal with costs of RM30,000 and upheld the High Court’s judgment ordering him to pay RM1.24 million in disgorgement to the SC. This is equal to three times the losses avoided by Ng, as a result of the insider trading. 

Ng was also ordered to pay the SC a civil penalty of RM700,000 and is barred from being appointed as a director of any public listed company for five years, starting from the date of the High Court judgment on 17 November 2022. The High Court also granted the SC RM100,000 in costs.

The breach occurred when Ng disposed 16.5 million Patimas shares that he owned between May and July 2012, while in possession of material non-public information relating to audit queries and issues about suspicious transactions between Patimas and its top debtors. The matter had been raised and discussed by Patimas’ external auditor during a meeting with the company’s management.

On 31 July 2012, Patimas’ Board of Directors announced to Bursa Malaysia that the company would not be able to issue the Annual Audited Financial Statements for the financial period from 1 January 2011 to 31 March 2012 due to unresolved significant audit findings/queries.

The SC was represented by Mohd Hafiz Mohd Yusoff, Mageswary Karroppiah, and Eunice Ong Jo Xing, alongside SC’s appointed external counsel. Ng was represented by Dato’ Jasbeer Singh.

The SC views insider trading as a serious breach as it undermines the integrity of the capital market and subsequently erodes investor confidence in the stock market. The decision of the Court of Appeal today sends a clear message that such breaches will not be tolerated by the SC as well as the courts.