PUTRAJAYA (April 8): The Federal Court has upheld a decision by the Court of Appeal and the High Court against lawyer Datuk Sreesanthan Eliathamby to pay the Securities Commission of Malaysia (SC) a total RM2.89 million in fines after finding him liable for insider trading of Worldwide Bhd shares in 2006.

A three-judge panel, led by Chief Judge of Malaya (CJM) Datuk Seri Hasnah Mohammed Hashim, dismissed Sreesanthan’s appeal against the High Court and Court of Appeal’s decisions unanimously, and ruled in the negative for five questions of law posed to the bench by Sreesanthan.

The bench ruled that the SC does not need to seek authorisation from the attorney general (AG) before it initiates civil action against a person.

Hasnah, who read her judgement, said that the powers of the AG under Article 145(3) of the Federal Constitution does not apply to civil proceedings.

“The offence [at hand] does not extend to include civil actions; the powers of the AG under Article 145(3) of the Federal Constitution are clear — they only apply to prosecutions and proceedings in criminal cases,” she said.

The CJM was answering the question of law posed by Sreesanthan, which asked:

Does the power given solely to the attorney general to institute "any proceedings for an offence" under Article 145(3) of the Federal Constitution extend to civil action brought under the Securities Industry Act 1983 (SIA) and/or the Capital Markets and Services Act 2007 (CMSA).

Hasnah said that the AG could apply to intervene in civil cases where public interest is concerned, and added that the power of the AG does not extend to civil action brought under the Securities Industry Act 1983 (SIA) and/or the Capital Markets and Services Act 2007 (CMSA).

The other judges on the panel were Federal Court judges Datuk Abdul Karim Abdul Jalil and Datuk Vazeer Alam Mydin Meera.

Sreesanthan had been ordered by the High Court to pay the SC RM1.89 million, which is three times the profits gained as a result of the insider trading, along with a civil penalty of RM1 million, and he is barred from being a director of any listed company for 10 years starting from Nov 18, 2020.

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

The bench held that Section 89E(1)(b) of the SIA requires that Sreesanthan, as the appellant, knows or ought to reasonably know that the information is not generally available.

It also held that in determining the materiality of the information in the possession of the insider information, the court is not confined to the facts and circumstances at the time of the acquisition, but may also take into consideration facts and circumstances after the time of the impugned acquisition.

They then dismissed the appeal with RM100,000 in costs.

Datuk Dr Gurdial Singh Nijar, Abraham Au, Kristen Ta, and Lau Mark Chi-Ming acted for Sreesanthan.

SM Shanmugam and Siew Hui Yi from Messrs Shan Chambers acted for the SC, assisted by SC counsels Shoba Venu Gopal, Mageswary Karroppiah, Daniel Ariff Tung and Low Wen Zhen.

Senior federal counsels Shamsul Bolhassan and Liew Horng Bin acted as amicus curiae, to assist the court in this case.

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