PUTRAJAYA (April 25) : A three-member Federal Court bench on Thursday granted leave (permission) for lawyer Datuk Sreesanthan Eliathamby to have the merits of his appeal for a civil penalty of RM1 million imposed on him for insider trading of Worldwide Holdings Bhd shares in 2006 be heard.

Chief Justice Tun Tengku Maimun Tuan Mat, who led the bench, granted leave for the questions of law to be determined by the apex court.

“The bench is unanimous in its decision, and we granted order in terms,” Tengku Maimun said. 

She sat with Chief Judge of Sabah and Sarawak Tan Sri Abdul Rahman Sebli and Federal Court judge Datuk Nordin Hassan in making the unanimous decision.

With that, the merits of Sreesanthan’s appeal would be heard at another date by the apex court.

Sreesanthan had been ordered by the High Court to pay the Securities Commission RM1.99 million, which is three times the profits gained as a result of the insider trading along with the civil penalty of RM1 million and barred from being a director of any listed company for 10 years from Nov 18, 2020.

The High Court decision was affirmed by the Court of Appeal on Sept 6, 2022 resulting in this appeal.

Sreesanthan acquired 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 Perbadanan Kemajuan Negeri Selangor.

At the material time, Sreesanthan was a senior partner in a law firm which was engaged to act as the legal adviser of the proposed privatisation of Worldwide.

In Thursday's proceeding Sreesenthan was represented by Datuk Gurdial Singh Nijar and Gopal Sreenevasan while SC was represented by counsel SM Shanmugam.

Gurdial argued that authorization had to be sought from the Attorney General before the SC can initiate the civil action arguing that any proceeding including civil ones needed the go-ahead from the top prosecutor.

He argued that since for insider trading under the old Securities Industry Act 1983 accorded criminal action while the newer Capital Market Services Act 2007 that accorded civil action, consent from the AG should be made a requirement.

In addition, Gopal argued as to the question on whether in determining insider trading the defendant is subject to strict liability in possessing the information, or proof that not only he has the information and intends to use the information and whether the impugned act of acquiring the shares was made at the time of the acquisition or after the acquisition.

These questions they argued would be beneficial for the apex court to determine as such positions were clear in Singapore where such consent was needed from the AG in civil cases on insider trading and that at present in the courts in Malaysia, they adopted strict liability, and proof of having information and intended to use it in determining insider trading.

Shanmugam argued that the AG’s consent was not required in civil proceedings and that the courts below, namely the High Court can determine which to adopt in deciding a case for insider trading. 

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