KUALA LUMPUR — The 111 people who sued QEW Group Bhd over a RM20.45 million investment signed documents saying they understood the risks. That is the core of the company’s defence, filed in the High Court through Messrs Ahnaf Zaimi & Co. The investors, aged from relatively young to very advanced, want their money back. They claim fraud.
They want declarations that directors Iqbal Mohamad and Fairoz Muhammed orchestrated a fraudulent scheme and acted negligently. They seek special damages, exemplary and aggravated damages, and interest at a fixed rate per year until full settlement.
QEW and its two directors say the investors were not victims. They were “sophisticated investors.” The Redeemable Preference Shares-i scheme, or RPS-i, was a structured product. It required a significant minimum investment.
The plaintiffs met the Securities Commission Malaysia’s criteria for sophisticated investors, the defendants argue. That criteria suggests a certain level of financial expertise and understanding of investment risks.
The agreement itself is central. The defendants said it expressly disclosed that subscribers could lose their entire investment. The plaintiffs signed warranties confirming that, according to the defence.
So the claim that the scheme guaranteed capital protection or profits is, in the defendants’ words, “wholly illogical” and inconsistent with the commercial nature and actual structure of the RPS-i agreement. What is at stake here is not just RM20.45 million. It is the legal meaning of a signed warranty.
If the court accepts that these investors, despite their age range and numbers, were sophisticated enough to understand a speculative product, then the company’s defence holds. If the court finds that the structure of the RPS-i was misleading despite the fine print, then the directors face personal liability for negligence and fraud.
The plaintiffs filed suit in April. They are not just asking for their capital back. They want aggravated and exemplary damages — a punitive element that signals the court’s disapproval of the alleged conduct.
The interest claim, at a fixed rate per year until full settlement, compounds the financial pressure on the company and its directors. For QEW, the case tests whether a structured product marketed to sophisticated investors can still be deemed a fraudulent scheme if the investors later claim they did not understand the risks.
For the 111 plaintiffs, the case tests whether signing a warranty absolves the seller of responsibility for how the product was sold. The defendants rejected the notion that the scheme was a guaranteed investment. They said the RPS-i agreement disclosed the risk of total loss.
The investors, they argue, knew that. The High Court will now decide which version of events holds. One side says the investors were sophisticated enough to accept the risk.
The other says the risk was hidden behind a structured product and a signature.
