KUALA LUMPUR (April 22):The High Court on Monday ordered businessman Datuk Lim Kok Boon to pay a civil penalty of RM1 million to the Securities Commission for insider trading.

Lim, the former chief executive officer of GW Plastics Holdings Bhd, was also ordered by Judge Adlin Abdul Majid to pay another RM142,500, three times the disgorgement of the gain made by his friend Cheah Mean Har, after finding both of them liable for insider trading. Lim is also barred from being appointed as a director of a public listed company for five years.

Cheah, meanwhile, was ordered to pay a civil penalty of RM500,000 in addition to another RM142,500 or three times the profits made. Adlin also ordered Lim to pay total cost of RM200,000 while Cheah has to cough up RM30,000 in costs.

Adlin however, did not grant an oral application by Lim and Cheah’s counsel of an interim stay of the decision while they file a notice of appeal to the Court of Appeal. “This court would expedite the hearing of the stay once the notice of appeal is filed,” she said.

The disgorgement is stipulated in Section 201(5) of the Capital Markets and Services Act 2007 (CMSA), while the civil penalty is imposed under Section 188 of CMSA.

Securities Commission counsels objected to the stay of the decision pending appeal, as the SC cannot be stopped from making public this finding by the court.

The ad-interim stay was sought by Lim's counsel Steven Thiru and Cheah’s lawyer Jonathan Gerard.

Adlin, in finding the duo liable for insider trading, said the court was satisfied on a balance of probabilities as the court did not believe Lim’s purported claim that his conversation with Cheah on the critical period of Sept 25 to 27, 2012, may not only be the purchase of insurance.

The judge also found that Lim was seen to be evading his relationship with Cheah, a single mother and a car dealer during the trial.

“There is a lack of transparency as if there was something to hide in [Lim’s] testimony,” the judge said, stressing that Lim was “not forthcoming on his relationship” with Cheah.

Besides this, it is not in dispute that the first defendant has direct insider knowledge,” Adlin said. “In my view, the first and second impugned trade [between Sep 25 and 27, 2012] and communication between them was not for the purpose of seeking advice of medical insurance.

“It is not likely the trade [of shares] is mere coincidence,” the judge said.

Lim was chief executive officer and non-independent executive director of GW Plastics during that critical period of the transaction and Cheah is alleged to have purchased 200,000 GW Plastic shares on Sept 25, 2012 and 150,000 GW Plastic shares two days later.

At that time, GW Plastic made an announcement on Sept 28, 2012, that it was suspending trade of its shares, and on Oct 3, 2012, GW Plastic signed an agreement to sell 100% equity interest in GW Plastics and GW Packaging to Scientex for a total cash consideration of RM238.2 million.

Prior to this, it was reported that Lim had denied the insider trading allegations following the suit filed by the SC in 2017 adding that the claim was scandalous, frivolous, vexatious and otherwise an abuse of the court process.

SC filed the suit in Sept 2017, claiming that Lim had communicated material non-public information to Cheah, who then allegedly purchased GW Plastics shares while in possession of the information.

It is understood that the SC may issue a statement on the matter later on Monday.

Datuk Lim Chee Wee and Kelvin Seah appeared as counsels for the SC.