KUALA LUMPUR — The legal battle over QEW Group Bhd’s RM20.45 million investment scheme has boiled down to a single, sharp question: were the 111 plaintiffs naive victims or seasoned players who knew the game? QEW and its two directors, Iqbal Mohamad and Fairoz Muhammed, filed a statement of defence through law firm Ahnaf Zaimi & Co that essentially says the latter. The investors, the defence argues, met the Securities Commission Malaysia’s criteria for “sophisticated investors.” That label carries weight.
It implies financial literacy, an understanding of risk, and — crucially — no need for the hand-holding regulators give retail punters. The scheme at the centre of the suit is QEW’s Redeemable Preference Shares-i, or RPS-i.
The defendants describe it as a structured product aimed squarely at sophisticated investors. A high minimum investment threshold was part of the design. That alone, they argue, should have signalled this was not a safe-haven product for widows and orphans.
Yet the plaintiffs include investors spanning a wide age range — from relatively young to very advanced age. They filed suit in April demanding the return of their capital.
They want the court to declare that Iqbal and Fairoz ran a fraudulent scheme and acted negligently. They are also seeking a hefty sum in special damages, plus exemplary and aggravated damages, and interest at a fixed annual rate until full payment. The defendants reject the fraud claim outright.
They call the notion that the RPS-i scheme guaranteed capital protection or profits “wholly illogical.” That is strong language for a legal document. It suggests the defence sees the investors’ case as not just wrong but fundamentally at odds with how the product was sold. According to the defence, the RPS-i agreement expressly warned that subscribers could lose their entire investment.
Investors signed warranties confirming they understood this. The defendants argue that these documents are not boilerplate fine print but clear, upfront disclosures.
If the plaintiffs signed them, the defence says, they cannot now claim ignorance. This case is shaping up to be a test of how Malaysian courts treat the “sophisticated investor” classification. The Securities Commission’s criteria are meant to protect retail investors by walling off high-risk products.
But once an investor qualifies as sophisticated, the regulatory safety net pulls away. The assumption is that they can fend for themselves.
The plaintiffs’ lawyers will likely argue that sophistication is not a blanket waiver for fraud. Even a seasoned investor can be misled by false promises or concealed risks. The defence’s position, however, is that the RPS-i agreement laid out the risks plainly.
If the investors chose to ignore them, that is not the company’s fault. Where this leads is hard to predict. A ruling in favour of the defendants could embolden other firms to target sophisticated investors with similarly speculative products, confident that the courts will not second-guess the deals.
A win for the plaintiffs could force a re-examination of what “sophisticated” actually means in practice — and whether signing a warranty truly amounts to informed consent. For now, the case sits in the High Court.
The investors want their money back. The company says they knew what they were getting into. The judge will have to decide which version of events matches the documents signed at the time.
