Hong Kong has seen its first successful prosecution for insider dealing under the Securities and Futures Ordinance 2003. The case concerned a finance manager of a subsidiary of Sino Golf Holdings Ltd. In the course of her employment the manager became aware that a debtor of the subsidiary company had filed for Chapter 11 bankruptcy protection in the US. She sold her holding of 180,000 shares in Sino Golf before the market became aware of the debtor's financial difficulties and its impact on the subsidiary.The Securities and Futures Commission (SFC) argued that by selling her shares at this time she avoided a loss of HK$63,333. This argument was upheld by the the Eastern Magistracy. The Principal Magistrate sentenced the employee to six months' imprisonment (suspended for two years), fined her HK$200,000 and ordered her to pay $20,253 in costs to the SFC.
For further information see:
SFC press release | Insider dealing is defined in Section 270 of the Securities and Futures Ordinance 2003.
1 comment:
Is it not a bit too harsh for something like that? Financial difficulties of a debtor may be already a public information and therefore the PSI level is only slightly PSI or really no effect - for that small amount. If this law is not defined properly - then everythign could become PSI and therefore liable for insider trading. Is the person reckless to speculate and with intention to make money by selling short or just trying to sell to save her investment. Come to think of it, if not defined properly, this is a bloody dangerous law. Even the size of my CEO's balls - if not disclosed, can potentially become a PSI
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