SC doesn’t need AG’s consent to bring civil cases, rules Federal Court

 

The Federal Court dismissed lawyer E Sreesanthan’s appeal against an order requiring him to pay the Securities Commission RM2.99 million, with costs of RM100,000.

PUTRAJAYA: 

The attorney-general’s (AG) power under the Federal Constitution to institute criminal proceedings does not extend to civil actions for insider trading brought by the Securities Commission (SC), says the Federal Court.

As such, Chief Judge of Malaya Hasnah Hashim said, the SC does not require consent from the AG to bring lawsuits under Section 90A(5) of the Securities Industries Act 1983 (SIA).

“Any civil action constituted under the provision need not require consent, and the absence of the AG’s consent will not render the civil action and imposition of penalties unconstitutional,” she said in dismissing an appeal by corporate lawyer E Sreesanthan.

Sreesanthan was seeking to set aside a Court of Appeal ruling that held him liable for insider trading of Worldwide Holdings Bhd’s shares in 2006. The SC had previously won the case in the High Court.

Also on the apex court panel hearing the appeal were Justices Abdul Karim Abdul Jalil and Vazeer Alam Mydin Meera.

Sreesanthan had posed three questions of law.

They concerned the mens rea element for insider trading, the materiality of the inside information, and the issue of whether the SC is required to obtain the AG’s consent prior to initiating civil actions.

Article 145(3) of the constitution concerns the discretionary power of the AG to institute, conduct or discontinue any criminal proceedings.

Counsel for Sreesanthan had argued that the AG’s power under Article 145(3) extends to civil actions brought by the SC.

Hasnah said the AG could apply to intervene in civil cases that involve public interest.

However, this does not mean that the AG’s prior consent must be obtained before civil cases are initiated, she said.

The bench also ordered Sreesanthan to pay costs of RM100,000 to the SC.

Sreesanthan was ordered by the High Court to pay RM1.99 million – three times the profits gained as a result of insider trading – and an additional civil penalty of RM1 million.

He was also barred from acting as a director of any public-listed company for 10 years, effective November 2020.

The Court of Appeal upheld that decision.

Sreesanthan secured leave of the apex court to appeal against the Court of Appeal’s decision at the beginning of last year.

Lawyers Mark Lau, Gurdial Singh Nijar, Abraham Au and Kristen Tan represented Sreesanthan.

The SC was represented by counsel SM Shanmugam and Siew Hui Yi, and SC officers Shoba Venu Gobal, Mageswary Karroppiah, Daniel Ariff Tung and Low Wen Zhen.

Senior federal counsel Shamsul Bolhassan and Liew Horng Bin represented the AG. - FMT