Insider Dealing in Hong Kong

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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.

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