Saturday, 21 July 2012

KL 'heavyweight' charged with insider trading

Article from the Singapore Business Times:

"One of Kuala Lumpur's most prominent corporate lawyers, Sreesanthan Eliathamby, was charged yesterday on seven counts of insider trading, according to a report in the online version of The Star newspaper.

The news sent ripples through Kuala Lumpur's legal fraternity as Sreesanthan, 51, is not only a highly respected merger and acquisition (M&As) specialist but a major corporate figure.

The lawyer, a senior partner of Kadir, Andri, Aidham & Partners, sits on the boards of several listed firms, including Maybank, Sime Darby, Guinness-Anchor and Scomi Group. He was also the legal adviser in several of billionaire T Ananda Krishnan's most visible deals, including the RM40 billion (S$16 billion at current rate) privatisation of telco Maxis in 2007".

The official announcement from the Securities Commission (SC) can be found here.

Everybody is innocent until proven guilty. But the fact that the SC goes after a heavyweight must be applauded. And especially insider trading is perceived to be rampant in Malaysia, so it is quite timely that action has been taken in that area.

The details of the charges are quite specific:

"The charges involved three counts of insider trading in the shares of Sime Darby Berhad in 2006, ahead of the acquisition by Synergy Drive of companies within the Sime Darby, Guthrie and Golden Hope groups. The two counts of insider trading in the shares of Maxis Communications Bhd, which were preferred under the Securities Industry Act 1983, were alleged to have taken place during the privatisation of Maxis in 2007.

Two other charges were preferred for insider trading under section 188(2) of the Capital Markets and Services Act 2007 involving the shares of UEM World Bhd and VADS Bhd in 2008. Dato' Sreesanthan's trades in UEM World were said to have been made with his knowledge of the corporate restructuring of the UEM group, while his trades in VADS allegedly involved his knowledge relating to VADS's proposed privatisation."

The last sentence of the press release is a bit puzzling though: "The SC has been proactively pursuing market misconduct cases ....".

To go after cases that happened six years ago is not really proactive, according to my dictionary.

Proactive: "Acting in advance to deal with an expected difficulty; anticipatory".

Although insider trading is often not easy to prove, six years is a really long time, these cases should be wrapped up more quickly in my opinion: "follow the moneytrail!"


  1. The most recent move by the SC is indeed interesting. However could this be a case of utilizing the most available evidence as the other bits were too difficult. Consider the facts 1) he has been director at all the high profile companies during the time there were major corporate developments, 2) he was probably the corporate lawyer 3) he also sits on investment committee for major fund.

    Is insider trading the only issue, what about the companies, did they benefit from insider information from him in formulating their strategy?

    What about Maybank, he is was/is a director, during the period there was a massive turnaround in profitability and also when the started securing all the major deals which has been the traditional space of CIMB. Coincidence only or INSIDER INFORMATION. Sime has been purged for mistakes, what about for companies doing exceptionally well from such information, should they warrant a much closer look. Would it be unimaginable Maybank and the likes also benefitted. This in itself warrants much closer scrutiny and raises many more questions on the management integrity and perhaps even the board. Such conflicts should be avoided, however the excesses of the market post 1998/99 has been forgotten where director were actually assess on independence and NON-CONFLICT. I hope the Minority watch group and corporate governance body will look much closer into this.

    Its happening every, there are going to be charges brought for rigging of Libor in the UK its time for Malaysia to start cleaning up again and make it stick.

  2. Yes, indeed about time Malaysia starts cleaning up its act and stick to it.