SIDC Module 6 Securities offences question: Teras Bhd shares on Bursa Securities while, by prior arrangement

SIDC Module 6Securities offences

Hafiz sells 40,000 Teras Bhd shares on Bursa Securities while, by prior arrangement, his wife buys the same 40,000 shares through another PO at the same price. How does CMSA s.175 treat the trade?

A It is insider trading under s.188, since Hafiz knew of his wife's buy order before the rest of the market
B It is lawful because legal title passed to a different person, so beneficial ownership changed hands between the two spouses at that price
C It is an offence only if the SC proves that another investor was actually induced to buy or sell Teras shares as a result
D It is deemed false trading, since his wife is an associate, unless Hafiz proves it was not his purpose and he was not reckless

Show the answer and explanation

Answer: D. It is deemed false trading, since his wife is an associate, unless Hafiz proves it was not his purpose and he was not reckless

A spouse is a person associated with Hafiz (s.3(1)(a)), and under s.175(5) a sale does not change beneficial ownership if an associate of the seller has an interest in the shares afterwards. Section 175(3)(a) deems a transaction with no change in beneficial ownership to create a false or misleading appearance of active trading. The only escape is the s.175(4) defence: Hafiz must establish that creating a false appearance was not his purpose and that he did not act recklessly. Separate legal title does not matter once the associate rule applies. No proof that anyone was induced is needed for the deeming provision. Knowing about a family member's order is not inside information about the company. Source: CMSA 2007 ss.3(1)(a), 175(3)(a), 175(4), 175(5) (as at October 2026).

Common mistake

Candidates treat a sale to a spouse as a genuine change of ownership and miss the associate rule in s.175(5).

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Study note: Securities offences under the CMSA SIDC Module 6 practice questions & mock exams

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Lim, a taxi driver, overhears two directors of Saujana Bhd discussing an unannounced take-over offer and buys Saujana shares the next morning. Which statements are correct under CMSA s.188?The SC brings a civil action under s.200 against Rina for stock market manipulation under s.176. She made a gross gain of RM400,000. What is the most the court can order her to pay in total under s.200(2)?Daniel instructs his dealer's representative to sell 10,000 Mutiara Bhd shares that he neither owns nor has borrowed, planning to buy them back before settlement. Under CMSA s.98, the sale is

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Original study material mapped to the public SIDC Module 6 syllabus. Unofficial, not endorsed by SIDC or the SC. Verify figures and rules against current guidance before relying on them.

SIDC Module 6 Securities offences question: Teras Bhd shares on Bursa Securities while, by prior arrangement

SIDC Module 6Securities offences

Hafiz sells 40,000 Teras Bhd shares on Bursa Securities while, by prior arrangement, his wife buys the same 40,000 shares through another PO at the same price. How does CMSA s.175 treat the trade?

A It is insider trading under s.188, since Hafiz knew of his wife's buy order before the rest of the market
B It is lawful because legal title passed to a different person, so beneficial ownership changed hands between the two spouses at that price
C It is an offence only if the SC proves that another investor was actually induced to buy or sell Teras shares as a result
D It is deemed false trading, since his wife is an associate, unless Hafiz proves it was not his purpose and he was not reckless

Show the answer and explanation

Answer: D. It is deemed false trading, since his wife is an associate, unless Hafiz proves it was not his purpose and he was not reckless

Common mistake

Candidates treat a sale to a spouse as a genuine change of ownership and miss the associate rule in s.175(5).

Practise more Module 6 Securities offences questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practising →

Original study material mapped to the public SIDC Module 6 syllabus. Unofficial, not endorsed by SIDC or the SC. Verify figures and rules against current guidance before relying on them.