Hong Kong’s Court of First Instance has sentenced Ms Sit Yi Ki and Mr Tam Cheuk Hang to imprisonment of six years and eight months, and Ms Lam Wing Ki to imprisonment of four years and four months after they were found guilty in a jury trial of conspiracy to carry out false trading in the shares of Ching Lee Holdings Limited.
This action followed extensive investigations by the Hong Kong Securities and Futures Commission (SFC) and the prosecution by the Department of Justice.
In a statement on 22 July, the SFC said this was “the heaviest jail sentence imposed on market manipulation cases since the Securities and Futures Ordinance (SFO) came into effect in 2003”.
The SFC was assisted in the case by a raft of other jurisdictions, namely the China Securities Regulatory Commission, the Hong Kong Independent Commission Against Corruption, the Monetary Authority of Singapore, the Ontario Securities Commission, the Singapore Police Force, the United Kingdom Financial Conduct Authority, and the US Securities and Exchange Commission.
In sentencing, deputy High Court judge Douglas Yau said that the conspiracy in the present case was intricately and meticulously planned.
Having considered various sentencing authorities, and taking into account the scale, sophistication and international element of the conspiracy and the false trading, as well as the importance of maintaining the integrity of Hong Kong as an international financial centre, the Court considered that deterrence and punishment are most important in this case.
The SFC’s executive director of enforcement, Christopher Wilson, said: “The jail sentences reflect that the Court is taking a very dim view of misconduct pernicious to the reputation and integrity of Hong Kong’s securities and futures markets. Putting the market manipulators behind bars sends a very strong and clear message to would-be wrongdoers that misconduct of any form has no place in Hong Kong’s financial markets, and that they would be brought to justice and face the full force of the law.”
“The outcome of this highly sophisticated and complex case also underscored the SFC’s determination to bring its resources and powers to bear in tackling market abuses and maintain investor confidence in Hong Kong’s capital markets,” Mr Wilson added.
In parallel, the SFC is seeking orders under section 213 of the SFO against various local and overseas corporations and individuals, including the three jailed, to disgorge their profits in the manipulative scheme involving Ching Lee shares and/or restore the affected counterparties to their pre-transaction positions. In this connection, the SFC had obtained interim injunctions freezing assets of up to $124.9m, representing the combined profits generated from trading activities of the manipulative scheme.
