"The Securities Commission Malaysia (SC) today charged Dato’ Ch’ng Chong Poh, the former Chief Executive Officer (CEO) of Malaysia Pacific Corporation Berhad (MPAC) with 58 counts of insider trading of MPAC shares between 14 May 2008 and 20 August 2008.
All 58 charges preferred against Dato’ Ch’ng were for offences under Section 188(2) of the Capital Markets and Services Act 2007. Dato’ Ch’ng had allegedly acquired the MPAC shares ahead of the entering into of a multi-million ringgit joint venture project between Oriental Pearl City Properties Sdn Bhd, a wholly owned subsidiary of MPAC and Amanahraya Development Sdn Bhd (ADSB), a wholly owned subsidiary of Amanah Raya Berhad, to undertake and manage several projects in the Iskandar Development Region in Johor.
The offences carry a punishment of mandatory imprisonment not exceeding 10 years and a fine of not less than RM1 million.
Dato’ Ch’ng claimed trial to the charges preferred. Sessions Court judge, Tuan Mat Ghani bin Abdullah who set bail at RM300,000 with one(1) surety also required Dato’ Ch’ng to surrender his international passport to the court.
The SC views insider trading seriously and will continue to actively enforce such breaches to maintain investor confidence in the capital market."
As far as I can remember, this is only the third time ever that someone is charged for insider trading. I am all in favour of more enforcement regarding possible insider trading, just pity that it took six years to file the charges.
The announcement for the project with ADSB can be found here. The project had indeed a decent potential, that is if all would go according to plan. The reader should however be reminded that during the summer of 2008 the global recession started to take shape, culminating in the fall of Lehman Brothers (September 2008).
The share price of MPAC during that period:
Notable is the sudden rise in price and volume starting end of July 2008, about one month before the official announcement of the project.
There are a few interesting issues regarding to this case. First of all, this is a screenshot of the announcements of Bursa Malaysia of MPAC:
In other words, no change in shareholding has officially been reported to Bursa between May and August 2008.
Another issue is that the official announcement of the project was made on August 20th 2008, but that The Edge Malaysia published some details of the deal already in their issue dated August 18th 2008, according to this announcement, which is a reply on a query by Bursa.
Ch’ng Chong Poh has by the way recently resigned as CEO of MPAC on December 19, 2013 according to this announcement.
MPAC is involved in several material litigation cases, for instance here and here, but also in one involving the above joint venture agreement with ADSB.
The last annual shareholders meeting seems to have been a rather heated affair, the company had to issue twice clarifications to Bursa, here and here.
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