The court affirmed that trading based on inside information constitutes insider trading, which is actionable under the CMSA.

Introduction

[1] This is a civil claim filed by the Plaintiff for insider trading pursuant to s 201(5)(a) of the Capital Markets and Services Act 2007 ("CMSA").

[2] The Plaintiff's claim against the Defendant for:

(a) a declaration that the Defendant had breached s 188(2)(a) of the CMSA;

(b) the sum of RM2,363,122.50;

(c) a civil penalty of RM1,000,000.00 or any other amount (not exceeding RM1,000,000.00) that this Court deems appropriate to the Plaintiff;

(d) interest at the rate of 5% per annum on the judgment sums in (b) and (c) above from the date of judgment until full and final realisation thereof;

(e) an order that the Defendant be barred from being a chief executive or director and from being involved in the management, directly or indirectly, of any other public listed company in Malaysia for a period of 5 years from the date of judgment or for such period as may be determined by this Court pursuant to s 360(1)(a)(L) of the CMSA 2007;

(f) an order that the Defendant be restrained from trading in any securities on Bursa Malaysia for a period of 5 years from the date of judgment or for such period as may be determined by this Court pursuant to s 360(1)(a)(B) of the CMSA 2007;

(g) costs on a solicitor-client basis or costs.

[3] The Defendant's main contentions are that the Plaintiff has not discharged its burden of proving that material non-public information was in fact communicated to him and that in any event, such information was not `material' as defined in s 185 of the CMSA. More specifically, the Defendant contended that the increase in the share price immediately on the information becoming generally available was too low and or insignificant which the Defendant said constitutes conclusive proof that the information is not `material'.

Background Facts

HPI Resources Berhad

[4] HPI Resources Berhad ("HPI") was a public listed company on the Main Market of Bursa Malaysia from 1997 until 9 September 2011. HPI was the investment holding company and part of the HPI group of companies ("HPI Group"). The HPI Group was involved in the manufacturing and marketing of packaging products such as corrugated boards and carton boxes.

[5] The management and ownership of HPI was primarily in the hands of Albert Chan, Chan Choo Sing, Chan Chow Tek, and Chan Chor Ang ("the Chan Brothers"). Lucrabase Sdn Bhd ("Lucrabase"), was a significant shareholder with a 40.69% stake in HPI, which was mainly controlled and owned by the Chan Brothers.

The Acquisition Of HPI

[6] Oji Paper Co Ltd ("OPC") was a Japanese corporation which was desirous of expanding its business overseas during January 2010 to June 2011, especially in Southeast Asia. To that effect, OPC established a subsidiary in Malaysia, Oji Paper Asia Sdn Bhd ("OPA") in September 2010.

[7] In October 2010, OPC was introduced to HPI's leadership through a meeting that took place on 27 October 2010 at Restoran Loon Sing in Nilai.

[8] Subsequently, OPC and Lucrabase signed a Confidentiality Agreement on 12 November 2010 ("Confidentiality Agreement") aimed at allowing OPC to evaluate and negotiate the potential acquisition of Lucrabase's shares in HPI.

[9] From 8 December 2010 to 10 December 2010, representatives from OPC and OPA visited HPI's factories in Malaysia as part of the due diligence process.

[10] On 9 December 2010, a dinner gathering was held between OPC, OPA, and HPI's leadership in Batu Pahat. During this meeting, the Chan Brothers informed the OPC and OPA representatives in attendance that they were serious about selling HPI.

[11] On 19 January 2011, a factory v