A study of the laws and regulations on insider trading in Malaysia / Wong Yoke Eng

• Main Author: Wong, Yoke Eng
• Format: Thesis
• Published: 1997
• Subjects: K Law (General)
• Online Access: http://studentsrepo.um.edu.my/9155/1/A_STUDY_OF_THE_LAWS_AND_REGULATIONS.pdf; http://studentsrepo.um.edu.my/9155/
• Institution: Universiti Malaya

Insider trading is an offence under the Securities Industry Act, 1983 (Act 280) and the Companies Act, 1965 (Act 12S) but it is difficult to prosecute in a criminal court. This thesis considers an overview of the laws on insider trading in the Securities Industry Act, 1983 when a person is charged as an insider and when he deals directly, or indirectly in securibies. The elements of actus reus and the mens rea of the person should be clearly elaborated in the Securities Industry Act. However in the present state of the laws, the elements of actus reus and mens rea in the of fence of insider trading are not adequately defined in section 89 and section 90 of the Securities Industry Act 1983. The words "improper use" in section 89 (1) of the Securities Industry Act 1983 is not defined in the Securities Industry Act, nor has it been subjected to judicicial interpretation. It is not certain how the words should be defined from the viewpoint of the issuer, and the investing public. The word "information" has been referred to as specific, confidential, unpublished, price sensitive, and if generally known to the public, might reasonably be expected to affect materially the price of the subject matter of the dealing on the stock exchange under section 89 of the Securities Industry Act 1983. Yet, for each aforesaid words which described the nature of information required under the Securities Industry Act 1983, such words are not defined in the Securities Industry Act 1983, though subject to judicial interpretation. The most effective remedy to prevent and minimise the incidence of insider trading by the authorities and the self-regulatory authority ie. the Kuala Lumpur Stock Exchange, is the mandatory public disclosure of the particulars relating to dealings in securities on the Stock Exchange. Under section 45 of the Securities Industry (Central Depositories) Act, 1991 (Act 453) disclosure of particulars relating to dealings are not permitted except with the approval of the Minister of Finance on the ground of public interest. It is pertinent to amend Section 45 of the Securities Industry (Central Depositories) Act 1991 to enable any person who dealt in listed transferable securities, and was aggrieved by insider dealing, to have access to such data on the dealings in securities. No doubt the laws on insider trading are contained in section 89 and section 90 of the Securities Industry Act 1983, but the most powerful weapon against the issuer for any offences committed under the securities industry law is the enforcement of the laws under section 87A of the Securities Industry Act . 1983. charged public insider The Securities Commission has recently Chua Seng Huat, the managing director of a listed company, Kim Hin Industry Ber had for trading under section 89 and 90 of the Securities Industry Act 1983 in the Sessions Court in Kuching in the state of Sarawak. In the Securities Commission Report of 1996 released on the 10th June 1997, the Securities Commission intends to push for more recognition on the civil remedies such as restitution and disgorgement of gains for any violations of the securities laws.