Private Enforcement and Civil Claims under the Capital Markets and Services Act 2007 (CMSA)

BY MESSRS LUI BHULLAR

Private Enforcement and Civil Claims under the Capital Markets and Services Act 2007 (CMSA)

Investors in Malaysia who suffer losses due to market misconduct can initiate private enforcement actions under the Capital Markets and Services Act 2007 (CMSA). With the support of an experienced capital market lawyer or a reputable capital market law firm, investors can pursue civil remedies to recover financial losses—independent of any criminal action brought by the Securities Commission Malaysia (SC).

Statutory Remedies for Aggrieved Investors

The CMSA provides a statutory framework for investors to take civil action against parties involved in securities fraud, insider trading, market manipulation, or false disclosures. The relevant provisions include:

• Section 199 CMSA – Liability for false or misleading statements or omissions in disclosures.

• Section 201 CMSA – Liability for misleading statements in connection with securities.

• Section 210 CMSA – Civil liability for breaches involving market misconduct.

• Section 248 CMSA – Liability for insider trading and other forms of prohibited conduct.

• Section 249 CMSA – Civil claims arising from market rigging, false trading, or deceptive practices.

• Section 357 CMSA – Right to civil action by parties who suffer loss or damage due to contraventions of securities law.

These legal provisions empower investors to take private legal action with the guidance of a CMSA lawyer, even if no criminal prosecution has been commenced.

Common Law Remedies: Misrepresentation & Negligence

Beyond statutory rights, the common law in Malaysia also plays an important role in investor protection. Depending on the circumstances, civil claims may be brought for misrepresentation or negligence—especially when the CMSA does not address specific situations.

A skilled capital market lawyer or financial services lawyer in Malaysia can evaluate whether common law remedies are viable, providing clients with comprehensive capital markets legal advisory.

Due Diligence Defence under Section 250 CMSA

When facing civil or criminal liability for false or misleading disclosures, Section 250 of the CMSA provides a statutory due diligence defence. A person will not be liable under Section 248 CMSA if they can demonstrate that:

• All reasonable inquiries were made under the circumstances; and

• They had reasonable grounds to believe, and did believe, that the statement was true and not misleading, and that no material facts were omitted.

This defence is particularly important for professionals involved in the preparation of prospectuses, offer documents, and disclosures—especially those seeking securities fraud legal advice.

SIDREC: A Forum for Investor Dispute Resolution

For disputes involving licensed capital market intermediaries—such as stockbrokers or fund managers—retail investors may turn to the Securities Industry Dispute Resolution Center (SIDREC). This is a cost-effective platform for resolving claims up to RM250,000, and the process includes:

• Mediation

• Negotiation

• Adjudication

Once a matter is adjudicated, the decision is binding on the intermediary. However, the investor still retains the right to pursue civil remedies in court if unsatisfied with the outcome. A reputable capital market law firm or capital market dispute lawyer can assist clients through both SIDREC and court-based proceedings.

Legal Remedies: Damages and Equitable Relief

Courts generally award compensatory damages to restore the investor to the position they would have been in had the wrongdoing not occurred. In addition to damages, the court may grant equitable relief, such as:

• Injunctions – to restrain unlawful conduct or prevent future harm

• Specific performance – to enforce obligations under contracts or agreements

Conclusion

Private enforcement under the CMSA offers a powerful legal avenue for investors to claim compensation from wrongdoers engaged in securities misconduct. Whether the claim involves insider trading, market manipulation, or false statements, investors should consider engaging a dedicated capital market lawyer in Malaysia or a well-established capital market law firm.

With the right legal team—be it a CMSA lawyer, investment fraud lawyer, or financial services lawyer Malaysia—investors can enforce their rights, seek justice, and hold market participants accountable in accordance with Malaysia’s capital market regulatory framework.

Contact Us for Legal Assistance in Capital Markets

If you are looking for trusted capital market lawyers in Malaysia, get in touch with us today.

Whether you need legal assistance with securities law, IPO, M&A, debt financing, or regulatory compliance, we are here to help you navigate the complexities of the capital markets and achieve your business objectives.

WhatsApp [+60143000970] or email [general@luibhullar.com]to schedule a consultation.