Malaysia’s Court of Appeal Overturns High Court Decision in Insider Trading Case Against Datuk Ramesh Rajaratnam

Significant Ruling Reverses Acquittal of Former MMM Executive Deputy Chairman

KUALA LUMPUR, May 6 — In a major setback for Datuk Ramesh Rajaratnam, the Court of Appeal today overturned a High Court decision that had acquitted him of insider trading charges. The former Malaysian Merchant Marine Berhad (MMM) executive deputy chairman now faces the possibility of being reinstated with the conviction and sentence originally imposed by the Sessions Court.

Court of Appeal’s Duty to Consider Merits of the SC Appeal

A three-judge panel of the Court of Appeal, consisting of Justices Datuk Vazeer Alam Mydin Meera, Datuk Ahmad Zaidi Ibrahim, and Datuk Wong Kian Kheong, unanimously ruled that the original judgment failed to consider the merits of the Securities Commission Malaysia (SC) appeal.

The Court of Appeal has a judicial duty to consider the merits of the appeal. — Justice Wong Kian Kheong

Charges against Datuk Ramesh Rajaratnam

Ramesh was initially charged in 2015 under Section 188(2)(a) of the Capital Markets and Services Act 2007 (CMSA) with three counts of insider trading. These allegations resulted from the SC’s assertion that he had disposed of MMM shares worth over RM122 million while in possession of confidential inside information.

Insider Trading Allegations

The first charge claimed that Ramesh traded 5 million MMM shares on January 11, 2010, before a public announcement of a proposed credit rating downgrade from A-ID to BB+ID by Malaysian Rating Corporation Berhad.

The second and third charges alleged that between February 11 and 22, 2010, Ramesh had disposed of a total of 5,200,800 MMM shares while in possession of material inside information regarding the company’s PN17 classification.

Consequences of the Original Conviction and Appeal

The Sessions Court initially convicted and sentenced Ramesh to five years’ imprisonment and a fine of RM3 million for each charge. However, in 2020, the High Court allowed his appeal and set aside the conviction and sentence. The SC, with the consent of the Public Prosecutor, elected not to pursue the appeal for the second and third charges.

The Court of Appeal’s Ruling

With today’s ruling, the case is to be remitted to the High Court for further proceedings on the merits before a different judge, while Ramesh faces the possibility of reinstatement of the previous conviction and sentence imposed by the Sessions Court. He was ordered to pay a bail of RM200,000 and surrender his passport to the court.

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