Tuesday, December 25, 2018

'Insider Dealing in Hong Kong Essay\r'

'Although insider transaction has been a roughshod impinge onensive activity under department 291 of Chapter 571, Securities and Futures Ordinance (SFO) in Hong Kong since 2003, the Securities and Futures management (SFC) was initially slow to prosecute offenders, commencing its first felonious insider transaction prosecution tho in January 2008.\r\nFactors to be considered to commence criminal legal proceeding\r\nIn deciding whether to commence criminal proceedings against an alleged insider dealer, the SFC will imbibe regard to the guidelines in the prosecution insurance policy of the Department of Justice, which require two elementary factors to be considered:\r\n1. Sufficiency of point The freight of proof is greater in criminal proceedings and the SFC will generally only recommend criminal proceedings where on that point is admissible, substantial and reliable evidence that an offence has been committed and there is a fairish prospect of a conviction. Where ther e is a lack of sufficient evidence to sports meeting the criminal burden of proof, the SFC is likely to founder civil proceedings.\r\n2. Public interest Whether, pickings into account the circumstances of a peculiar(a) case, it is in the public interest to kick in a prosecution forwards the accosts.\r\n start-off Criminal Case of Insider Dealing in Hong Kong\r\nIn the case of HKSAR v Ma Hon-yeung (DCCC 229-240/2008) which involved Ma Hon-yeung, former crime President of BNP Paribas Peregrine Capital Ltd, instanter known as BNP Paribas Capital (Asia Pacific) Ltd (BNP Paribas), an coronation bank.\r\nThe case is related to duty in the dole outs of Egana Jewellery & Pearls Ltd (â€Å"Egana”), a listed union in Hong Kong prior to an announcement do to the market on 11 Jul 2006 astir(predicate)privatization of the company.\r\nMa Hon-yeung learned of a proposed privatization of Egana and tipped off his girlfriend, common ivy Lo Yuk-wah and trinity other family me mbers, Sammy Ma Hon-kit, Cordelia Tso Kin-wah and Ronald Ma Chun-ho, within days of congruous privy to the proposed deal. All of them bought shares in Egana before the company announced a privatization plan and do a profit as a result.\r\nBetween 1 June 2006 and 6 July 2006, trading in Egana’s shares ranged amongst HK$1.35 and HK$1.61 with average daily turnover of 636,630 shares. trade 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 privatization of Egana. The proposal offered shareholders a select of receiving HK$1.80 per share or one 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 HK$1.84 with substantially increased turnover of 25 million shares. The privatization proposal was approved by shareholders and by the court and became effectiv e on 23 October 2006. Egana was delisted on the following day.\r\nMa acted as a financial consultant for Egana during the privatization move, which he knew was confidential, price sensitive entropy. Ma had counselled or procured Ivy and Sammy to trade in Egana shares. He was convicted of insider dealing contrary to scratch 291(1)(b).\r\nIvy, bought 1.51 million shares in Egana between June 20 and July 6, 2006. She was convicted of insider dealing contrary to air division 291(5)(a).\r\nMa transferred a total HK$1.7 million into Ivy’s account before the privatization announcement. She later(prenominal) sold the shares and transferred the money back to Ma’s account.\r\nSammy , Cordelia and Ronald bought Egana shares separately from July 6.\r\nSammy, Ronald and Cordelia traded in Egana shares having tuition through Ma’s federation to Egana about the proposed privatisation. Owing to their close family kinship between Ma andhis three family members, who certa in and made profit by utilizing much(prenominal)(prenominal) information, all of them were convicted of insider dealing contrary to section 291(5)(a) and (8) of SFO.\r\nMa and Ivy were given tutelary sentences of 26 months and 12months respectively.\r\nMa’s three family members were ordered to serve 200 hours of partnership service.\r\nFines were also imposed in amounts alike to the profits they had made while dealing in Egana shares ahead of the privatization which are HK$230,000, HK$210,000, HK$330,000, HK$110,000 and HK$17,000 respectively.\r\nThe tap also ordered them to pay the Securities and Futures Commission (SFC) investigation costs totaling HK$322,742.\r\nThis is the first prison term any psyche has been sentenced to jail for insider dealing in Hong Kong.\r\nThe family members avoided custodial sentences because they were merely opportunist investors making use of the relevant information divulged by the vice-president. There was no evidence that they assiste d him in carrying out his mend for personal gain by exploitation insider information. The conduct of the girlfriend, on the other hand, warranted a custodial sentence as she was the person executing the plot on behalf of the vice-president. She was fully aware of his position of trust in the financial institution and had used her trading account to perpetrate the plot. As such, the court viewed her involvement in the misconduct as being much more sobering than that of an opportunistic investor; community service could non adequately reflect her culpability.\r\nHowever, we continue to guarantee obvious and flagrant breaches of the insider dealing laws, such as insiders and/or their families’ members will apply the confidential information they obtained to make a gain on disposal of shares. superstar of the reasons may be that the punishment for insider dealing in Hong Kong is mild for the offenders.\r\n'

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