Monday, 27 November 2017

Insider trading, why the differences in punishment? (2)

I received the trading data of APLI during the time the insider trading.

Three snippets from the article on the SC website:

  • Thai was convicted for communicating non-public information between 26 October 2007 and 29 October 2007 to Tiong
  • APLI made announcements to Bursa Malaysia Securities Bhd about the audit adjustments and its classification as a PN 17 company on 31 October 2007
  • Tiong was convicted for two counts of disposing a total of 6,208,500 APLI shares while in possession of the same non-public information

If the announcement was made on October 31 2007, then the share price would have been impacted on the following trading date, November 1, 2007.

The relevant closing prices of APLI on those days are:
  • October 26, 2007: RM 0.39
  • October 29, 2007: RM 0.40
  • November 1, 2007: RM 0.31

So if Tiong sold 6,208,500 on October 26 and/or October 29 instead of November 1 (when the news was available to all parties), then the price difference is in the order of 6,208,500 times about RM 0.09, or about RM 560,000.

Compared to the sentences (5 years jail and RM 5 Million fine for Thai) that looks like a surprisingly small amount.

Just to put it in perspective, I suspected insider trading in Proton shares (see link) and wrote:

EPF sold about 15 million shares of Proton, for a price clearly below the MGO price. If the buyers of these shares were trading with insider information, then EPF was disadvantaged for an amount of roughly RM 20-30 million on those trades.

And that was just one party (EPF) possibly (hugely) disadvantaged in just one suspected insider trading case in Malaysia. I am pretty sure I can come up with dozens of similar suspicious insider trading cases, if not more.

According to this article in The Edge, Thai's lawyers "have advised that there are sufficient grounds to appeal on the conviction. As to the sentence, his lawyers have also filed an appeal on the grounds that it is manifestly excessive."

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