The Federal Court of Malaysia handed down a landmark judgement in favor of Yap, formerly the deputy chairman of Patimas Computers Berhad. Specifically, they found him guilty for committing insider trading on behalf of the company’s stock. This follows a lengthy saga of legal battles. Those proceedings began in 2012 when Patimas blew the whistle on numerous financial irregularities.
On July 31, 2012, Patimas’ board of directors dropped the bombshell. They ultimately told Bursa Malaysia that the firm would no longer be able to produce its annual audited financial statements. This announcement was for the fiscal year covering January 1, 2011 through March 31, 2012. The firm was unable to issue these statements as a result of significant findings from audit still outstanding. These discoveries were alarming, casting substantial doubts on the company’s financial liquidity.
2020 – After years of investigation by the Securities Commission (SC), the SC finally initiated a civil suit against Yap. They alleged that he breached sections 188(a) and (b) of the Capital Markets and Services Act 2007 (CMSA). The SC found Yap guilty of selling down 43.8 million Patimas shares in June and July 2012. They allege that he did so with the benefit of material, non-public information. It raised questions related to ongoing audit queries and even caught suspicious transactions linked to Patimas’ largest debtors.
Patimas announced publicly that it was unable to publish its financial statements. Almost immediately thereafter, they sold off these shares, prompting questions on the unusual timing and processes behind Yap’s transactions. The email said that at the time, Yap had a unique knowledge of Patimas’ financial issues. Once again, this information was proprietary and not publicly available.
Yap’s legal battles progressed through various courts, culminating in a unanimous decision by the Court of Appeal on November 27, 2024, which affirmed the High Court’s finding of his liability in the insider trading case. In the wake of this adverse ruling, Yap subsequently filed an application for leave seeking leave to appeal the ruling.
“The leave application was filed by Yap following the unanimous decision of the Court of Appeal, on Nov 27, 2024, which had affirmed the High Court’s finding that he was liable for insider trading of Patimas shares in 2012.” – Securities Commission (SC)
This case illustrates just how important transparency in fiscal reporting is. It reiterates the importance of adhering to insider trading laws. The SC has taken a hard line on these types of violations to uphold a level playing field in the markets and protect investors.
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