Market Misconduct Tribunal sanctions two former executives for insider dealing

Market Misconduct Tribunal sanctions two former executives for insider dealing

Market Misconduct Tribunal sanctions two former executives for insider dealing 1402 790 Hauzen

On 7 April 2021, following legal proceedings brought by the Securities and Futures Commissions (the “SFC”), the Market Misconduct Tribunal (“MMT”) sanctioned two former executives of Asia Telemedia Limited (“ATML”) (now known as Yunfeng Financial Group Limited) – Mr Charles Yiu Hoi Ying (“Yiu”) and Ms Marian Wong Nam (“Wong”).

The MMT’s orders came after the Court of Final Appeal (the “CFA”) allowed an appeal brought by the SFC. In the appeal, the SFC argued that the defence under section 271(3) of the Securities and Futures Ordinance (the “SFO”) did not apply to Yiu and Wong as their sole motivating factor was to secure profits from the unexpected speculative boom in the price of ATML shares. Section 271(3) of the SFO provides a defence that a person should be acquitted if he did not have a purpose of making profit by using inside information.

The MMT also found that the elements of insider dealing were established against Yiu and Wong, holding that when selling their shares, they had information which they knew constituted inside information, that is, price sensitive information.

The MMT made the following orders after the CFA remitted the matter to the tribunal to deal with sanctions:

  • Yiu and Wong be banned from dealing in securities in Hong Kong for three years, effective from 15 April 2021;
  • Yiu be disqualified from being a director or being involved in the management of a listed company for three years, effective from 15 April 2021;
  • Yiu not to engage in insider dealing and Wong not to engage in any conduct which constitutes market misconduct again;
  • the losses of $3,123,329.02 and $1,076,937.97 avoided by Yiu and Wong, respectively, in their insider dealing of ATML shares be disgorged;
  • Yiu and Wong to pay the SFC’s investigation and legal costs, as well as the costs of the MMT proceedings; and
  • the MMT report be referred to the Hong Kong Institute of Chartered Secretaries with a recommendation to take disciplinary action against Wong.

The MMT also awarded Mr Lu Ruifeng (“Lu”), former chairman and executive director of ATML, and Ms Cecilia Ho King Lin, former assistant company secretary of ATML, with legal costs for the reason that they were not identified as persons who had engaged in market misconduct in the same legal proceedings brought by the SFC against Yiu and Wong.

The legal proceedings in the Court of First Instance under section 213 of the SFO against Lu for his alleged insider dealing in ATML shares is ongoing.

For assistance with regulatory issues under the SFO or help with SFC enforcement matters, please contact us today.

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