KUALA LUMPUR: Supermax Corp Bhd group managing director Datuk Seri Stanley Thai Kim Sim has today been sentenced to a five-year jail term and RM5 million fine for insider trading.
The offence was committed when Thai was the chief executive officer of APL Industries Bhd (APLI).
He was convicted alongside former remisier Tiong Kiong Choon, who is also sentenced to five years jail and RM10 million fine.
Insider trading offences, under section 188 of the Capital Markets and Services Act 2007 (CMSA), carry a mandatory punishment of imprisonment not exceeding 10 years and a fine of not less than RM1 million.
It is learnt that this is the first insider trading conviction where both the tipper (the person who communicated the inside information) and the tippee were charged and convicted for the offence.
It is also understood that Thai paid the fine and appealed against the conviction, and hence the jail term was suspended.
Thai was convicted for communicating non-public information between Oct 26, 2007 and Oct 29, 2007 to Tiong.
Tiong, meanwhile, was convicted for two counts of disposing a total of 6.2 million APLI shares while in possession of the same non-public information via accounts belonging to his mother-in-law and his mother.
At the time of the commission of the offence, Tiong was also a licensed intra-day trader with a stockbroking company.
The non-public information communicated from Thai to Tiong related to the audit adjustments proposed by APLI's auditors which resulted in APLI reporting a higher loss for the financial year ended June 30, 2007, as compared to the previously reported unaudited Q4 results for the same financial year, and that APLI would be classified as a PN 17 company.
APLI made announcements to Bursa Malaysia about the audit adjustments and its classification as a PN 17 company on Oct 31, 2007. APLI was delisted in 2009.
In passing the sentence, Kuala Lumpur Sessions Court judge Zulqarnain Hassan ruled that a deterrent sentence was warranted as insider trading offences were deemed more serious than conventional crimes, given far reaching effects on investors' confidence and the public as a whole.
"Insider trading is a modern white-collar economic crime. It is serious and is in a category or class of its own," he said.
The conviction came after a full trial where 14 witnesses testified for the prosecution while four witnesses testified for the defence.
Supermax shares gained two sen or one per cent to RM2.09 on Friday.