Court finds two solicitors engaged in insider dealing and fraud or deception

15 Jan 2016



The Court of First Instance today found that two solicitors, Mr Eric Lee Kwok Wa and Ms Betty Young Bik Fung, and Eric Lee’s sister, Ms Patsy Lee Siu Ying, contravened the Securities and Futures Ordinance (SFO) by insider dealing in the shares of Asia Satellite Telecommunications Holdings Ltd (Asia Satellite) and engaged in fraud or deception in transactions involving securities of Hsinchu International Bank Company Ltd (Hsinchu Bank) (Note 1).

The court’s decision is a landmark ruling on the interpretation of section 300 of the SFO which prohibits the use of fraudulent or deceptive schemes in transactions involving securities.

The Securities and Futures Commission (SFC) started civil proceedings in the court against Eric Lee, Betty Young, Patsy Lee and Ms Stella Lee, both sisters of Eric Lee, in December 2010 under section 213 of the SFO and alleged the defendants made a total profit of $2.9 million in these transactions.

The SFC alleged that, in relation to Hsinchu Bank transactions in September 2006:

The SFC further alleged that, in relation to Asia Satellite transactions in February 2007:

The court found that these allegations were proven against Betty Young, Eric Lee and Patsy Lee.

The court ruled that there was not enough evidence to prove the allegations against Stella Lee. Nevertheless, the court may exercise its power under section 213 of the SFO against her to remove the illicit profit from her and restore the victims in the transactions. The court may make orders under section 213 against people who are knowingly or otherwise involved in a contravention of the SFO.

The SFC and the defendants are directed to jointly work out the precise terms of the final orders in view of the judgment.

The court also directed that a copy of the judgement be sent to the Law Society of Hong Kong because Eric Lee and Betty Young are both member of the Law Society (Note 4).

End

Notes:

  1. Hsinchu Bank was a listed company on the Stock Exchange of Taiwan in September 2006 and Asia Satellite was a listed company on the Stock Exchange of Hong Kong in February 2007.
  2. On 29 September 2006, Standard Chartered Bank announced the tender offer for Hsinchu Bank shares at NT$24.50 per share which was around a 40% premium over the last closing price for Hsinchu Bank shares.
  3. On 14 February 2007, the proposed privatization of Asia Satellite shares was announced and the offer price was $18.30, which was around a 30% premium over the last closing price for Asia Satellite shares.
  4. Betty Young and Eric Lee were employed, at the relevant time, as solicitors by Slaughter & May and Linklaters respectively. They are no longer employed by these firms.
  5. Please also see the SFC’s press releases dated 28 October 2013 and 22 December 2010.


Page last updated : 15 Jan 2016