KUALA LUMPUR: The Securities Commission Malaysia (SC) has charged three individuals, including Supermax Corp Bhd chief executive officer (CEO) Datuk Seri Stanley Thai, in relation to insider trading offences in the glovemaker’s former associate company APL Industries Bhd (APLI).

Supermax’s share price plunged 16.5% or 32 sen to its two-year low of RM1.62 yesterday as the news started spreading. The weak market sentiment also weighed on its share price.

In a press statement yesterday, the SC said Thai, 54, was charged in the Kuala Lumpur Sessions Court yesterday morning for revealing non-public information between Oct 26 and Oct 29, 2007 to Tiong Kiong Choon, a remisier with a stockbroking company. Thai was then the CEO of APLI.

Tiong was charged by the SC last Tuesday in the Kuala Lumpur Sessions Court for disposing of 6.2 million APLI shares on Oct 26 and Oct 29, 2007, while in possession of the non-public information, through accounts belonging to his mother-in-law and his mother. In addition, the SC charged Thai’s spouse Tan Bee Geok, who was then APLI group executive director, for disclosing non-public information to her sister, Tan Bee Hong, between Oct 23 and Oct 31, 2007.  The regulator alleged that Bee Hong disposed of 350,000 APLI shares held in her account on Oct 31, 2007, after she got hold of the same non-public information.

Thai, Bee Geok and Bee Hong all claimed trial to the charges. Sessions Court judge Abdul Rashid Daud fixed bail at RM250,000 for Thai, while bail for Bee Geok and Bee Hong was fixed at RM250,000 and RM150,000 respectively.

The SC alleged that the non-public information referred to in all the charges related to the audit adjustments proposed by APLI’s auditors which resulted in the company reporting a higher loss amounting to RM21.1 million for the financial year ended June 30, 2007, compared with the unaudited results of RM4.5 million for the same period.  The adjustments resulted in APLI being designated as a PN17 company in 2007.

Supermax, in which Thai and Bee Geok collectively hold a 35.62% stake, emerged as a substantial shareholder of APLI after it had bought a 13.77% stake or 47.85 million shares in September 2005.  APLI fell into PN17 status in October 2007 as its shareholders’ equity on a consolidated basis of RM46.435 million was less than 25% of its total issued and paid-up share capital of RM347.61 million, said its statement dated Oct 31, 2007.

After a four-year investment venture into APLI, Supermax decided to abort a regularisation plan to revive APLI and ended its 14.09% investment in APLI by making a full and final write-off amounting to RM16.7 million in December 2008. APLI was delisted by Bursa Malaysia in 2009.

Last year, Thai surprised the corporate world when he declared his support for the opposition coalition before the 13th general election.

The SC’s director of enforcement Ahmad Fairuz Zainol Abidin said in the press statement that the abuse of inside information can seriously undermine market integrity and investor confidence. The SC added that the offences carry a punishment of mandatory imprisonment not exceeding 10 years and a fine of not less than RM1 million. The regulator also noted that Thai and Bee Geok were ordered to surrender their international passports to the court on Feb 3 and Feb 4, 2015 respectively while Bee Hong’s passport was surrendered to the court yesterday.

Thai’s lawyer William Leong told The Edge Financial Daily that the next hearing will be held on Jan 15 next year at Kuala Lumpur Sessions Court. “The lawyers are looking at the documents now to prepare for the next trial.”  Thai told The Edge Financial Daily he could not comment on the case and directed questions to his lawyers for further information.

In a separate press statement yesterday, Supermax said the charges against Thai and Bee Geok are strictly related to transactions in APLI shares which allegedly occurred in 2007.

“Both Datuk Seri Stanley Thai and Datin Seri Cheryl Tan (Bee Geok) have fully cooperated with the Securities Commision throughout the investigations related to APLI shares,” said the company.  The glovemaker said its business operations are not affected and are running as usual in all Supermax offices and factories.

This article first appeared in The Edge Financial Daily, on December 16, 2014