Insider trading violations, judged on circumstantial evidence and materiality of non-public information, fall under statutory provisions allowing civil actions and recovery of damages.

Introduction

[1] The counsel for the Plaintiff, Securities Commission Malaysia informed this court, this is the first case where the Plaintiff decided to take civil action against the Defendant, Chan Soon Huat for insider trading. Normally the Plaintiff would initiate criminal prosecution for such cases. The Defendant's counsel said there have been civil actions before but none has concluded.

[2] The Defendant is one of the founders of a public listed company, WCT Berhad ("WCT"). WCT is well known in the construction industry. The Defendant is alleged to make use of certain information unavailable at the material time to the general public to trade and dispose his shares and warrants in WCT.

[3] If the Plaintiff succeeds in this civil action, for the first time too, the Plaintiff could also recover from the Defendant thrice the amount of moneys he had obtained because of the disposal of the securities.

Background Facts

[4] On 26 December 1979, the Defendant and three (3) others ie Taing Kim Hwa ("Peter Taing"), Wong Chew @ Wong Chwee Lai and Wong Sewe Wing had started a partnership called WCT Earthworks and Building Contractors. On 14 January 1981, WCT Earthworks and Building Contractors Sdn Bhd was incorporated by them. On 1 April 1994, WCT was converted into a public limited liability company under the name of WCT Engineering Berhad. WCT was listed on the Second Board of Bursa Malaysia Securities Berhad ("Bursa Malaysia") on 16 February 1995 and thereafter on the Main Board of Bursa Malaysia on 7 January 1999. The Defendant had resigned as director of WCT on 13 August 1995.

[5] On 18 September 2007, WCT announced to Bursa Malaysia that Meydan LLC from Dubai, United Arab Emirates ("Meydan") had awarded a build-only contract ("the Contract") with a contract sum worth approximately RM4.6 billion to a 50:50 unincorporated joint-venture entity set up by WCT and Arabtec Construction LLC ("Arabtec"). This joint-venture entity was known as "Arabtec Construction LLC- WCT Engineering JV" ("the JV"). Pursuant to the same announcement, WCT announced that the JV had on 18 September 2007 accepted the award of the Contract.

[6] The Contract involved the construction and completion of the main building works, external works and infrastructure works in relation to the proposed construction of the "Nad AI Sheba Dubai Racecourse" in Dubai ("the Racecourse Project"). The duration for the completion of the Racecourse Project is 25 months. The Racecourse Project is the largest job secured by WCT during the year 2007.

[7] On 25 December 2008, Meydan had given the JV 14 days' notice of the cancellation of the Contract ("the Cancellation of the Contract"). This is a mid-stream termination. There were eleven months left in the Contract. On 29 December 2008, Leong Yeon Thoong ("Leong") who was then WCT's Regional Director was informed of the Cancellation of the Contract by Riad Kamal, who was the representative of Arabtec in the JV. Riad had also faxed the cancellation notice to Leong. On the same day, Leong had called Liang Kai Chong ("Liang") who was WCT's Executive Director at the head office to inform him about the Cancellation of the Contract and faxed over the cancellation notice to him in WCT's office. Following this, an emergency meeting of the board of directors of WCT was called to discuss the Cancellation of the Contract. The emergency meeting was attended by Peter Taing, Goh Chin Liong, Loh Siew Choh, Liang and Khor Loke Yew.

[8] On 6 January 2009 at 9.02 am, WCT announced to Bursa Malaysia that Meydan had issued the cancellation notice on the JV. On the same date at 11.10 am, Bursa Malaysia announced vide Listing Circular No. L/Q 52316 of 2009 that trading in WCT's securities had been halted with effect from 9.12 am on 6 Januar