KUALA LUMPUR (Sept 13): Former Malaysian Merchant Marine Bhd (MMM) executive deputy chairman Datuk Ramesh Rajaratnam has filed a lawsuit seeking a declaration from the courts that the Capital Markets and Services Act 2007 (CMSA) is unconstitutional.

Ramesh, who is an accountant by trade, filed the suit earlier this week citing that Section 188(2)(a) of the Act, which deals with insider trading, contravenes Articles 5(1), 8(1)(2), 10(1)(a) and 13 of the Federal Constitution.

Article 5(1) deals with the liberty of a person, while Article 8(1)(2) provides that everyone is equal before the law and entitled to equal protection, and that there shall be no discrimination against the country's citizens — including in the acquisition and disposal of property or in carrying any trade or taking on any vocation or employment. Article 10(1)(2) provides that a citizen has the right to freedom of speech and expression, while Article 13 states that no person shall be deprived of property save in accordance with the law.

In the originating summons filed at the High Court by solicitors Srimurugan & Co earlier, Ramesh named the Securities Commission Malaysia and the government as defendants.

He wants the courts to determine if the CMSA restricts the rights of an individual who was appointed as a director of a company to buy and trade in the stocks of the said company.

He is also seeking the courts' determination on whether CMSA restricts the rights and personal liberties of a person to buy and sell stocks if he/she is appointed as a director of a company.

Ramesh wants the court to decide whether CMSA is constitutional or not, because it fails to differentiate between a company director who has intention to seek opportunity from the company and a director who just wants to sell their stocks.

He is also claiming that CMSA is opposed to the “doctrine of proportionality” — the legal principle that states that a punishment for an offence should be proportional to the gravity of the offence — thus making it null and void and unenforceable.

He also said the CMSA violates his right to freedom of association and to property.

In his suit, Ramesh is seeking relief deemed fit by the court and other costs.

Ramesh has been convicted of three insider fighting charges brought against him by the SC.

He was originally charged with the offences at the Sessions Court here in April 2015 and subsequently sentenced to five years' jail, and fined RM3 million (in default of three years' imprisonment) for each charge.

 The High Court then in May 2021 acquitted his conviction and sentence on all three charges, a ruling that was reversed in May this year by the Court of Appeal as it ruled that the High Court had erred in acquitting Ramesh without considering the full merits of the case.

In the first charge, it was alleged that Ramesh had disposed of five million MMM shares in January 2010 while possessing material inside information regarding the proposed downgrade by Malaysian Rating Corp Bhd of its credit rating on MMM's RM120 million Al-Bai' Bithaman Ajil Islamic Debt Securities from A-ID to BB+ID.

In the second and third charges, Ramesh was alleged to have disposed of a total of 5.2 million MMM shares in February 2010 while possessing material inside information regarding the classification of MMM as a Practice Note 17 company.

The COA, in reversing the High Court's acquittal, also reinstated the earlier conviction and sentence imposed by the Sessions Court on the three charges.

The SC, however, is appealing against the sentence imposed on the first charge. Hence, the COA has ordered the case to be sent back to the High Court for the appeal to be heard before another judge.

The case is currently on hold pending the completion of another case.