Insider Selling 101???

The SC and Bursa must look into these developments of possible insider selling. Moola has thrashed this Megan issue to death (and very well deserved too). The question is when did the directors and management came to be aware of the likelihood of default. Surely things like this cannot happen overnight. Significant events and reasonable time till event are issues which must be weighed and to ascertain the "motives, knowledge possession" and the planning to act on "inside information". More stringent guidelines must be in place on lock up periods for selling/buying by "insiders". Is selling a month or two or even three month before a very significant event considered "legal" and above board?

We can all debate on this but we must continually improve the integrity and regulatory side of the markets to rise to global best practices. This is small when you talk of Megan, I hope not to discover similar questionable selling in Transmile ... anyway too tedious to do witch hunt, Moola can do it much better than me.

Yes or no, I hope the Bursa and SC will make a statement as to whether the selling below is considered OK by present standards.

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TheEdgeDaily 07-05-2007: Megan Media down on RM49m trade loan default by Tamimi Omar

Megan Media Holdings Bhd's shares fell as much as 17.5 sen or 27.13% in early trade on May 7 after its subsidiaries defaulted on RM47.36 million maturing trade facilities. At 10.40am, it was trading at 51.5 sen, down 13 sen or 20.16%. There were 18.98 million shares done at prices ranging from 47 sen to 60 sen.

The company announced on May 4 that its subsidiaries Memory Tech Sdn Bhd (MTSB) and MJC (Singapore) Pte Ltd were unable to meet these debt obligations by April 30, 2007. The company added “it was established that further impending maturities are also unlikely to be paid”.

“MTSB and MJC are experiencing financial difficulties as a result of constraints on its current cash flow from its operations which are insufficient to service and repay amounts due to lenders. Principally, this has been due to an exceptional build-up of its trade debtors,” it said.

Megan said the company had appointed a deputy chief executive officer and specialist advisory team to support an investigation into the underlying causes of the default and, if necessary, to formulate and initiate a comprehensive debt restructuring process.

“This will likely entail meetings with regulatory authorities, lending institutions, rating agencies, trustees and other relevant parties as well as appointment of an appropriate investment bank, accounting and legal firms to facilitate the due process,” it said.

Based on the available information, the group’s total exposure to its subsidiaries amounts to MYR465 mln, comprising a US$40 mln loan that was extended by the parent company to a subsidiary, and an issue of Bai’ Bithaman Ajil Islamic Debt Securities (BaIDS) with guarantee from the parent company.

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technically insolvent - total borrowings of MYR888 mln vs. total shareholders’ funds of MYR507 mln by end 3QFY07. High potential for bankruptcy.

YEO WEE SIONG (Director)

Disposed	23/02/2007	5,573,249
Disposed	26/02/2007	2,000,000
Disposed	28/02/2007	1,940,997

Disposed	06/02/2007	795,000
Disposed	07/02/2007	500,100
Disposed	08/02/2007	712,400
Disposed	09/02/2007	292,500

DATO' DR MOHD ADAM BIN CHE HARUN (Director)

Disposed	11/04/2007	400,500
Disposed	12/04/2007	120,000
Disposed	17/04/2007	148,000

Disposed	29/01/2007	100,000
Disposed	30/01/2007	570,000
Disposed	31/01/2007	100,000