High Court Clears Former MMM Deputy Chairman of Insider Trading Allegation
KUALA LUMPUR, Jan 23: The High Court on Friday acquitted former Malaysian Merchant Marine Bhd (MMM) deputy executive chairman Datuk Ramesh Rajaratnam of an insider trading charge, setting aside his conviction, prison sentence, and fine imposed by the Sessions Court in 2019.
The decision was delivered by Justice K. Muniandy, now a Court of Appeal judge, after allowing Ramesh’s appeal against his earlier conviction, which had carried a five-year jail term and a RM3 million fine.
In his judgment, Justice Muniandy ruled that the disposal of MMM shares in January 2010 was not driven by insider information but was instead executed under a predetermined plan aligned with the company’s corporate strategy.
The judge said that by December 2009, the market was already aware of MMM’s financial difficulties, including the potential suspension of its bonds, and noted that Ramesh himself had incurred personal financial losses during the period.
He added that the proceeds from the sale of the shares were used to cover company expenses, rather than for personal gain.
“The court is satisfied that the purpose of the transaction was not to make a profit or to avoid a loss, but to ensure the survival of the company,” Justice Muniandy said. “Accordingly, the conviction and sentence are set aside, and the appellant is acquitted.”
Ramesh was originally charged on April 29, 2015, with three counts of insider trading under Section 188(2)(a) of the Capital Markets and Services Act 2007 (CMSA).
The first charge alleged that he disposed of five million MMM shares on Jan 11, 2010, while in possession of material non-public information relating to a proposed credit rating downgrade by Malaysian Rating Corporation Bhd involving RM120 million in Islamic debt securities.
The second and third charges concerned the disposal of 5.2 million MMM shares on Feb 11 and Feb 22, 2010, allegedly while in possession of undisclosed information regarding MMM’s classification as a PN17 company.
On Sept 11, 2019, the Sessions Court found Ramesh guilty on all three charges and sentenced him to five years’ imprisonment and a RM3 million fine for each charge, with the jail terms to run concurrently.
Ramesh later appealed, and on May 20, 2021, the High Court allowed the appeal and acquitted him of all charges. However, the Securities Commission Malaysia (SC) subsequently challenged the decision.
On May 6, 2024, the Court of Appeal reinstated the conviction on the first charge and ordered the case to be remitted to the High Court for rehearing before a different judge, while maintaining bail at RM200,000 with one surety and ordering Ramesh to surrender his passport.
Friday’s ruling followed the rehearing ordered by the appellate court.