This article first appeared in The Edge Financial Daily on August 10, 2018
KUALA LUMPUR: The wife and sister-in-law of Supermax Corp Bhd’s founder and former group managing director Datuk Seri Stanley Thai Kim Sim were convicted of insider trading offences by the Kuala Lumpur Sessions Court yesterday.
Datin Seri Cheryl Tan Bee Geok and her sister Tan Bee Hong were sentenced to a five-year jail term and fined RM7 million each for insider trading involving the shares of APL Industries Bhd (APLI), which was once an associate of Supermax.
On Nov 24 last year, Thai was also sentenced to a five-year jail term and fined RM5 million for insider trading offences in relation to shares of APLI — when Thai was managing director. At the time, it was the first time the courts had handed down a custodial sentence for insider trading after a trial.
Former remisier Tiong Kiong Choon was also sentenced to five years in jail and a RM10 million fine then.
In a statement yesterday, the Securities Commission Malaysia (SC) said the court had convicted Bee Hong of insider trading as she was found to have disposed of 350,000 APLI shares while in possession of material non-public information. Bee Geok, who was an executive director of APLI in charge of finance then, was convicted of communicating the said non-public information to her between Oct 23 and Oct 31, 2007.
“Bee Geok had tipped her sister on the audit adjustments proposed by APLI’s auditors, which resulted in APLI reporting a higher loss for the financial year ended June 30, 2007 compared with the previously reported unaudited fourth-quarter results for the same financial year. The audit adjustments led to APLI being classified as a Practice Note 17 (PN17) company.
“APLI made announcements to Bursa Malaysia about the audit adjustments and its classification as a PN17 company on Oct 31, 2007,” said the SC. APLI was subsequently delisted from Bursa Malaysia in 2009.
The sisters were tried together in a full trial, where 13 witnesses testified for the prosecution and four witnesses for the defence.
In response to Bee Geok’s conviction yesterday, Supermax said in a Bursa filing that a succession plan is in place and that its business remains intact. The glove maker also said the court had granted a stay of execution pending appeal against the conviction and sentence.
“The company wishes to inform members of the public [that] a succession plan is in place and that it is business as usual in Supermax. Its management team is committed to delivering good business performance and profitability in the interests of the company and its shareholders,” it added.
Supermax also pointed out that the group has been delivering consistent profits and dividends to shareholders since its listing on Bursa in 2001. In its recent results for the third financial quarter ended March 31, 2018, Supermax’s net profit rose by 76.7% year-on-year.
“The management is confident about maintaining and improving the company’s performance in the next few quarters ahead,” it said.
Supermax added that the group and the management stand strong in growing the business going forward.
In a separate filing, Supermax said Bee Geok, 57, has vacated her position with immediate effect.
Meanwhile, the High Court yesterday dismissed an application by Thai to be reappointed as a director of Supermax.
According to the SC statement, the application was sought by Thai after he was disqualified as a director of Supermax following his conviction for the insider trading offence last year.
Under Section 188 of the Capital Markets and Services Act 2007, an insider trading offence is punishable with an imprisonment term of not exceeding 10 years and a fine of not less than RM1 million.
Supermax shares closed down six sen or 1.38% at RM4.28 yesterday, bringing a market capitalisation of RM2.26 billion.