SFC Starts First Criminal Prosecution for Insider Dealing
28 Feb 2008
The SFC has commenced criminal proceedings against five defendants alleging they have committed insider dealing offences.
This is the first criminal prosecution under section 291 of the Securities and Futures Ordinance (SFO) since insider dealing was made a criminal offence in 2003 (Note 1).
The five defendants, Mr Ma Hon Yeung, Ms Lo Yuk Wah Ivy, Mr Ma Hon Kit Sammy, Ms Tso Kin Wah Cordelia and Mr Ma Chun Ho Ronald appeared at the Eastern Magistracy today on a total of 12 charges.
The case was adjourned until 17 March 2008 to enable an application to be made by the Department of Justice to transfer the case to the District Court. This case will then be the first indictable prosecution for an offence under the SFO (Note 2).
The charges concern alleged trading in the shares of Egana Jewellery & Pearls Limited (“Egana”) prior to an announcement made to the market on 11 July 2006 about a proposal to privatise the company (Note 3).
The SFC alleges Ma Hon Yeung (“Ma”) joined BNP Paribas Peregrine Capital Limited (now known as BNP Paribas Capital (Asia Pacific) Limited) (“BNP”) as a Vice President on 1 June 2006. BNP was involved in advising Egana on the deal. The SFC alleges Ma knew about the proposed privatisation before it was announced.
Ma is alleged to have counselled or procured Lo Yuk Wah Ivy and Ma Hon Kit Sammy to trade in Egana shares. The SFC also alleges Lo Yuk Wah Ivy, Ma Hon Kit Sammy, Ma Chun Ho Ronald and Tso Kin Wah Cordelia traded in Egana shares having information through Ma’s connection to Egana about the proposed privatisation. The offences are alleged to have occurred between 1 June 2006 and 6 July 2006 (being the day before the announcement of the proposed privatisation).
The SFC will not make any further comments or disclose any further details about the case.
1. The summonses were filed by the SFC on 31 January 2008 following an SFC investigation.
2. The SFC is only permitted to prosecute offences under the SFO in the Magistrates Court where lower penalties can be imposed. The Department of Justice is able to prosecute indictable offences under the SFO. The maximum penalty for insider dealing of 10 years jail and a fine of $10 million can only be imposed upon conviction by indictment.
3. Egana was the jewellery division of EganaGoldpfeil (Holdings) Limited (“EganaGoldpfeil”) with its business principally in luxury and fashion branded jewellery. Egana was listed on the Stock Exchange of Hong Kong on 27 July 1998. Between 1 June 2006 and 6 July 2006, trading in Egana’s shares ranged between $1.35 and $1.61 with average daily turnover of 636,630. Trading in the shares of Egana and EganaGoldpfeil were suspended on 7 July 2006 pending an announcement. On 11 July 2006, Egana and EganaGoldpfeil made a joint announcement about a proposed privatisation of Egana. The proposal offered shareholders a choice of receiving $1.80 per share or 1 share of EganaGoldpfeil for every 1.5 Egana shares or a combination of both. Following the announcement on 11 July 2006 the share price closed at $1.84 with substantially increased turnover of 25 million shares. The privatisation proposal was approved by shareholders and by the Court and became effective on 23 October 2006. Egana was delisted on the following day.
Page last updated : 1 Aug 2012