SE v SURUHANJAYA SEKURITI MALAYSIA [2025] MLJU 2691

Federal Court (Putrajaya)

Securities Law — Insider trading — Civil action for trading while in possession of non-public, price-sensitive information

1. The Appellant, SE, was at the material time a corporate lawyer. Worldwide Holdings Berhad (“Worldwide”) was then a publicly listed company on Bursa Malaysia and the only listed subsidiary of Perbadanan Kemajuan Negeri Selangor (PKNS).
2. In March 2006, CIMB Investment Bank Berhad (“CIMB”) devised a proposal for PKNS to privatise Worldwide by way of a members’ scheme of arrangement under section 176 of the Companies Act 1965. On 5 May 2006, representatives of CIMB met SE to seek legal advice on the proposed privatisation. Thereafter, between May and June 2006, several meetings and telephone discussions took place between CIMB and SE concerning the proposed corporate exercise.
3. The Securities Commission of Malaysia (“SC”) contended that through these engagements, SE came into possession of confidential information that PKNS intended to privatise its listed subsidiary. Although the identity of the target company was not expressly disclosed, Worldwide was PKNS’s only listed subsidiary. On this basis, the SC alleged that SE had deduced that Worldwide was the subject of the proposed privatisation.
4. Between 7 June 2006 and 11 July 2006, while the proposed privatisation remained confidential and before any public disclosure, SE acquired a total of 600,000 Worldwide shares. The shares were purchased in two tranches:
   a. 200,000 shares between 7 June and 13 June 2006 at prices ranging from RM1.95 to RM1.96 per share; and
   b. 400,000 shares between 29 June and 11 July 2006 at prices ranging from RM2.1242 to RM2.2415 per share.
5. On 23 June 2006, CIMB instructed SE to commence preparation of transaction documentation and court papers for the scheme of arrangement. At that time, information relating to PKNS’s intention to privatise Worldwide was not generally available to the public.
6. The proposed privatisation first became publicly known on 19 August 2006, when a newspaper report stated that Worldwide was to be privatised by PKNS. Trading in Worldwide shares was suspended on 22 August 2006, and on 23 August 2006, Worldwide formally announced PKNS’s intention to privatise the company. Prior to the suspension, Worldwide shares closed at RM2.54 per share. The offer price disclosed for the privatisation was RM3.50 per share, and when trading resumed on 25 August 2006, the shares opened at RM3.22.
7. In September 2006, SE disposed of all 600,000 Worldwide shares and made a profit. The SC thereafter commenced a civil action under sections 89E and 90A of the Securities Industry Act 1983, alleging that SE had traded in Worldwide shares while in possession of non-public, price-sensitive information.
8. The High Court found in favour of the SC, and the decision was affirmed by the Court of Appeal. SE subsequently appealed to the Federal Court.

1. Whether “proceedings for an offence” under clause (3) of the Article 145 of the Federal Constitution includes civil proceedings brought under subsection 90A(5) SIA, thereby requiring the Attorney General’s consent before the Securities Commission may bring a civil insider-trading action?

Ratios

(1)  Whether “proceedings for an offence” under clause (3) of the Article 145 of the Federal Constitution includes civil proceedings brought under subsection 90A(5) SIA, thereby requiring the Attorney General’s consent before the Securities Commission may bring a civil insider-trading action?

(a) The Federal Court answered this question in the negative, holding that Article 145(3) applies only to criminal proceedings, and does not encompass civil enforcement actions under the Securities Industry Act (paras [32], [43]–[44]).

(b) The Court emphasized that the word “offence” in Article 145(3) refers exclusively to criminal offences, and that civil proceedings under sections 90 and 90A SIA are distinct, regulatory, and remedial in nature. They do not result in criminal convictions, imprisonment, or penal sanctions.

(c)  The Federal Court held that the civil penalties and disgorgement orders under section 90A(5) constitute civil debts, subject to a statutory limitation period of 12 years, features wholly inconsistent with criminal prosecution (para [42(d)–(f)]).

(d) The Federal Court held that the mere fact that the same conduct may also attract criminal liability under section 89E(4) of the SIA does not render a civil action under sections 90 and 90A “proceedings for an offence” within clause (3) of the Article 145 of the Federal Constitution, having regard to the distinct nature, consequences and statutory features of civil enforcement (paras [27]–[28], [40]–[44]).

1. The Federal Court dismissed the appeal with RM100,000 costs and affirmed the lower courts’ decisions. The Court also rejected his constitutional challenge, confirming that the Attorney General’s powers do not extend to civil actions under section 90A SIA.

1. Civil penalties under section 90A are distinct from criminal offences under section 89E(4); they do not trigger clause (3) of the Article 145 of the Federal Constitution.
2. Parallel criminal liability does not alter the civil nature of the action. The fact that the same conduct may constitute a criminal offence under section 89E(4) SIA does not convert a civil enforcement action into criminal proceedings.