Insider dealing in Hong Kong Although insider dealing has been a criminal offence under section 291 of Chapter 571, Securities and Futures Ordinance (SFO) in Hong Kong since 2003, the Securities and Futures Commission (SFC) was initially slow to prosecute offenders, commencing its first criminal insider dealing prosecution only in January 2008. Factors to be considered to commence criminal proceedings In deciding whether to commence criminal proceedings against an alleged insider dealer, the SFC will have regard to the guidelines in the prosecution policy of the Department of Justice, which require two basic factors to be considered: 1. Sufficiency of evidence The burden of proof is greater in criminal proceedings and the …show more content…
Fines were also imposed in amounts equivalent 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. The Court also ordered them to pay the Securities and Futures Commission (SFC) investigation costs totaling HK$322,742. This is the first time any person has been sentenced to jail for insider dealing in Hong Kong. The family members avoided custodial sentences because they were merely opportunistic investors making use of the relevant information divulged by the vice-president. There was no evidence that they assisted him in carrying out his plot for personal gain by using 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 serious than that of an opportunistic investor; community service could not adequately reflect her culpability. However, we continue to see obvious and flagrant breaches of the insider dealing laws, such as insiders and/or their families’ members will exploited the confidential information they obtained to make a gain on disposal of shares.
The fact that the insider trading charges were thrown out, but the conspiracy charges stuck is curious. It appears, yet again, the judicial process and mainstream social construct of acceptable behavior collided with what Martha, her broker, and fellow investor touted as ‘nothing wrong’. Knowing more of John Savarrese’s role as Martha’s pretrial counsel, gives two more important points about Martha’s case of white collar crime. The first is questionable ethics and the other is arrogance. Mr. Savarrese has been criticized by legal analysts for not providing ethical legal advice to Martha or making the right professional choices himself. The belief is that Savarrese knew or at least suspected, Martha and Bacanovic planned to perjure themselves. As Martha’s legal counselor it was ethically negligent of Savarrese not to advise Martha of the legal repercussions of lying to the SEC. If Martha insisted on presenting her fraudulent story, Savarrese should have immediately withdrawn as her counsel (Hoffman, 2007). More importantly than if Savarrese knew or not, in her arrogance, Martha never thought this issue of a mere $45, 637 would develop into charges nor a prison sentence! She was simply above the laws and saw no reason to tell the
Public Interest Stage – Conviction is more likely to result in a significant sentence if the:-
The Security and Exchange Commission is the organization who monitors fraudulent transactions and insider trading. Some experts in ethical behavior consider inside trading the most dramatic form of utilitarian ethics.
SEC alleged that Mark Cuban violated misappropriate insider trading. To be qualified as misappropriate insider trading, an individual wrongfully obtains (misappropriates) inside information and trades on it for her or his personal benefit. In this case, Cuban actually traded his shares based on the material inside information he was told and saved him $750,000 in losses. Wrongful misappropriation means violation of a fiduciary duty.
Similarly, Jordan Belfort committed illegal acts within his business, including selling penny stocks disguised as blue chip stocks to wealthy individuals and generating
In July of 2010, Scott Rothstein was sentenced to 50 years in prison for running a US$1.2 billion
Insider trading – insider trading is the trading of a corporation’s stock or other securities by individuals with potential access to non-public information about the
Sun Ship refused to pay the liquidated damages, C&H filed suit to require $4,413,000 in
Insider dealing has been affecting the efficiency of stock markets in different places like United States, United Kingdom and Australia. Hong Kong is of no exception. Basically, insider dealing refers to the trading of a corporation’s stock or other securities by individual with potential access to non-public information of the company. The law of insider dealing in Hong Kong provides a much more detailed definition and is very comprehensive. However, when it comes to enforcement, it seems not very effective. In the following, the law of insider dealing in Hong Kong will be summarized. After analyzing the comprehensiveness of the law, the underlying reasons of the difficulty in enforcement will be identified. Some
In today’s society crime occurs everyday across all aspects of life. One particular crime is that of white collar and corporate level crime. It is important that we as a society study this type of crime in depth because many individuals believe that white collar and corporate level crimes are victimless crimes when in reality they have the potential to destroy major corporations and economies all with one single case. The news or media rarely talk about this type of crime because it is often difficult to understand and individuals typically lack interest in these types of cases. One particular case is that of Jordan Belfort. Dubbed the infamous “Wolf of Wall Street” Jordan Belfort is a former stockbroker who robbed investors of over $200 million dollars to create his wealth through “pump and dump” schemes, insider trading, money laundering securities fraud, and stock-market manipulation. As an attempt to further understand these complex cases I will break down Belfort’s case as far as the methods and means as to how he got started, his use of “pump and dump” schemes and other means as to how he acquired his wealth. In addition to this I will discuss the sanctions and disciplinary action that Jordan Belfort was given, how the case affected society and what new regulations were
Issue 5: Has Patricia breached the prohibition of insider trading through the use of price-sensitive information when engaging her sister to buy shares in FPPL?
| * David should not disclose confidential information outside the firm. * If he seeks advice from his friend Peter, he will breach S140.1 & S140.5. * Peter can trade this information to benefit him – affecting MAL.
In industrial espionage, Chinese companies target and recruit an insider, an employee that will steal information for personal gain or as an agent of foreign organization or country. Chinese companies will just recruit employees away from employers that have the knowledge that is needed. The technology company Huawei has linked to multiple intellectual property thefts, from the stolen router product secrets from Cisco to trying to recruit Motorola employees to steal secrets. I remember hearing about a case where a former Motorola software engineer was sentenced to four years for stealing trade secrets for a Chinese telecommunications company Sun Kaisens that supplied equipment to the Chinese
2. What measures can and should be taken to make it easier for corporate employees to ‘‘blow the whistle’’ on a fraudulent scheme they uncovered within the firm?
Over the past two years, corporate America has endured a plethora of fraudulent acts committed by those of high status within their respective corporations, most of which involve internal fraud. Internal fraud has two main aspects, misappropriation of assets and fraudulent financial reporting, with the focus of this discussion lying within the former. Misappropriation of assets is defined as fraud for personal gain. It is the most common type of fraud found among employees and frequently includes theft of cash and inventory.