KUALA LUMPUR (July 10): The Securities Commission Malaysia (SC) has filed a civil suit against Sabah businessman Datuk Raymond Chan Boon Siew for alleged insider trading involving the shares of Naim Indah Corp Bhd (NiCorp), now known as Pegasus Heights Bhd (KL:PHB).

The suit, in which the SC is seeking a disgorgement and civil penalty totalling RM26.45 million, was filed on July 5, 2024 at the Kuala Lumpur High Court, said the SC in a statement on Wednesday.

The SC claimed that Chan breached the Capital Markets and Services Act 2007 (CMSA) as he had communicated insider information to Datuk Lim Thiam Huat — managing director and substantial shareholder of pulp and paper manufacturer Nextgreen Global Bhd (KL:NGGB). Lim has a 13.06% stake in Nextgreen Global.

The SC claimed Chan then procured Lim to acquire NiCorp shares. The act allegedly took place between the end of January 2012 and Feb 1, 2012.

The insider information was in relation to Chan’s intended purchase of NiCorp shares from Crest Energy Sdn Bhd, which was a substantial shareholder of NiCorp at the material time. The information was subsequently announced by NiCorp to Bursa Malaysia on Feb 8, 2012.

In its suit, the commission wants Chan to disgorge theoretical profits amounting to RM25.45 million, and pay a civil penalty of up to RM1 million.

It is also seeking an order to bar Chan from becoming a chief executive or director, or from being involved in the management of any public company for five years from the date of judgement, and from trading on Bursa Malaysia for the same period.

As for Lim, who acquired NiCorp shares between Feb 3 and 8, 2012 while in possession of the inside information, he had entered into a regulatory settlement with the SC on Dec 22, 2023 for having breached the CMSA.

The SC stressed that insider trading is a serious misconduct in the capital market.

“The continuous enforcement by the SC demonstrates its commitment to address misconduct and abuses affecting the integrity of the capital markets,” it added.

Chan was appointed as CEO of NiCorp on Feb 29, 2012, after he emerged as a substantial shareholder of the company with 85 million shares representing a 12.11% stake on Feb 8, 2012. He exited the company after he offloaded all his shares in the company in October 2014.

In August 2014, he was redesignated as a non-executive officer, but he only lasted a few months in the position before he resigned in November 2014.

From trading around three sen, NiCorp shares shot up to 36.8 sen on Feb 9, 2012, marking a more than a decade high at the time.

On Wednesday, Pegasus (formerly NiCorp) shares closed unchanged at one sen, bringing the group a market capitalisation of RM108.2 million.

Nextgreen Global also settled unchanged at 89.5 sen, giving the group a market capitalisation of RM908.6 million.