Securities Commission Malaysia Wins Insider Trading Lawsuit Against Lim Kok Boon and Cheah Mean Har

In a recent development, the Securities Commission Malaysia (SC) secured a victory in an insider trading civil lawsuit against Lim Kok Boon and Cheah Mean Har in the High Court.

Court’s Verdict against Lim and Cheah

High Court Judge Adlin Abdul Majid delivered the judgment against the duo. The following penalties were imposed:

• Lim, who was the CEO and non-executive director of GW Plastics Holdings Bhd at the time of the infringement, was ordered to pay a disgorgement amount of RM142,500 and a civil penalty of RM1 million, along with costs of RM200,000 to the SC. Additionally, Lim was prohibited from serving as a director for a publicly listed company for five years following the judgment date on April 22, 2024.
• Cheah was directed to pay a disgorgement amount of RM142,500 and a civil penalty of RM500,000, along with costs of RM30,000 to the SC.

Both Lim and Cheah were found to have violated the Capital Markets and Services Act 2007 (CMSA).

Lim’s Breach of Confidentiality

Lim was ruled to have breached section 188(3)(a) of the CMSA by sharing material non-public information with Cheah. This infringement led to Cheah acquiring GW Plastics shares on Sept 25 and Sept 27, 2012. Cheah was subsequently found guilty under section 188(2)(a) of the CMSA.

Disclosed Information

The material information that was shared with Cheah pertained to a proposed share sale agreement between GW Plastics and Scientex Packaging Film Sdn Bhd and the subsequent distribution of cash proceeds from the share sale agreement to GW Plastics’ shareholders. This information was disclosed by GW Plastics to Bursa Malaysia on Oct 3, 2012.

SC’s Statement

The Securities Commission Malaysia released a statement following the judgment, emphasizing the importance of this decision in maintaining market integrity.

“This decision sends a strong message against insider trading, demonstrating the SC’s firm stance on addressing market misconduct and malpractices that can jeopardize the sanctity of the capital market. The shared accountability of the corporate insider and the trader underscores the SC’s dedication to addressing insider trading and other market misconduct, ensuring a level playing field for all market participants.”

Appeal Filed

Both Lim and Cheah reacted to the High Court’s judgment by filing an appeal on the same day.