KUALA LUMPUR (Sept 5): Following a three-month internal probe into the conduct of three unnamed directors, Bintai Kinden Corp Bhd alleges that one of its former executive directors committed insider trading.
Touching on the delay in announcing the disposal of the Bintai Kinden shares and insider trading activities, the mechanical and electrical engineering firm said a former ED disposed of the shares preceding as well as on the date the company declared its Practice Note 17 (PN17) status.
It said this raised potential insider trading concerns, given the price-sensitive information available leading up to the PN17 bourse announcement on March 29.
While the former executive director in question is unnamed, a bourse filing dated April 24 listed that Bintai Kinden former executive director Noor Azri Noor Azerai dumped his entire shareholding of 12.6 million shares or 1.34% stake in Bintai Kinden on March 28 and 29.
He disposed of a block of 280,600 shares on March 28 at seven sen apiece. This was followed by the disposal of 12.32 million shares on March 29 at six sen per share.
Based on back-of-the-envelope calculations, Noor Azri sold his 1.34% stake for RM758,806.
It is worth noting that the filing dated April 24 listed the sale as “disposal in the open market due to margin call (forced selling)”, but this was later amended in a follow-up announcement half a month later on May 10 which labelled it just as a “disposal”.
Back in July 28, 2021, days after he first joined Bintai Kinden’s board as an executive director at the age of 22, Noor Azri acquired three million shares, then a 0.79% stake, for RM1.08 million.
The alleged insider trading claim is just one of the summary findings Bintai Kinden provided in its filing on Tuesday (Sept 5) after an independent law firm presented the findings of the internal probe into the three unnamed directors.
Note that just prior to the PN17 company announcing the commencement of the internal probe, four of its directors resigned from the board.
The directors who resigned weeks before the investigation were Noor Azri, former non-executive chairman Datuk Ibrahim Othman, non-executive vice and deputy chairman Ong Choon Lui and former independent non-executive director Mohd Shakir Suhaimi.
Both Ibrahim and Mohd Shakir joined the company’s board in March 2021. Ong has sat on the board since August 2000, then as a non-executive director.
Besides claims of insider trading, Bintai Kinden also flagged a series of unauthorised shares and cryptocurrency trading transactions, which it noted was mainly committed by the company’s former executive director, in his capacity as executive director of its wholly-owned unit Bintai Trading Sdn Bhd (BTSB).
From these, it noted that there were irregularities in BTSB’s trading in Malaysian Genomics Resources Centre Bhd (MGRC) and Emico Holdings Bhd shares, where a total of 98 of such transactions failed to comply with necessary bourse announcement requirements, despite BTSB at the time having already crossed the substantial shareholder threshold.
It is worth noting that at the time, Noor Azri joined MGRC's board end-December 2021 as an independent and non-executive director and was later redesignated as executive chairman May this year.
The company also underlined there were observable recurring patterns in MGRC share trading by BTSB, where intervals between announced transactions allegedly “seem timed to evade market detection, indicating possible market manipulation through wash-trading techniques”.
These unauthorised transactions continued despite Bintai Kinden’s board issuing a stock halt directive on May 5.
“This included transactions on the shares of SNS Network Technology Bhd, EG Industries Bhd, and MGRC. A concerning ‘Buy High & Sell Low’ trading pattern was identified, resulting in estimated losses of RM204,608.75,” the company said.
“In light of these findings, the board has decided to lodge an official report with both the local police and Bursa Securities, as well as the Securities Commission Malaysia,” it added.
Shares in Bintai Kinden ended unchanged at 7.5 sen, giving the group a market capitalisation of RM70.38 million.