SIDC Module 6 Securities offences question: directors of Saujana Bhd discussing an unannounced take-over offer

SIDC Module 6Securities offences

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? (i) Lim can be an insider although he has no connection with Saujana (ii) Lim is an insider only if he knew or ought reasonably to have known the information was not generally available (iii) Lim escapes liability because he came by the information by chance (iv) The prosecution must prove that Lim made a profit on the purchase

A (i) and (ii) only
B (ii) and (iii) only
C (iii) and (iv) only
D (i), (iii) and (iv) only

Show the answer and explanation

Answer: A. (i) and (ii) only

Section 188(1) defines an insider by the information held, not by any link to the company: a person is an insider if he possesses information that is not generally available and would be expected to have a material effect on price, and he knows or ought reasonably to know it is not generally available. So (i) and (ii) are correct. How the information was obtained is irrelevant, so overhearing it by chance gives no defence and (iii) is wrong. The offence in s.188(2) is complete when the insider acquires or disposes of the securities; no profit need be shown, so (iv) is wrong. Source: CMSA 2007 s.188(1), (2) (as at October 2026).

Common mistake

Candidates assume insider trading needs a 'connected person' such as a director or employee; the Malaysian test looks only at the information and the person's knowledge.

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

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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 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?

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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.