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Hong Kong’s Court of First Instance decided on July 22 the sentences of Sit Yi-Ki, Tam Cheuk-Hang and Lam Wing-Ki, following a guilty verdict for the charge of conspiracy to carry out false trading in Ching Lee Holdings’ shares.
The decision comes after comprehensive investigations by the Hong Kong's Securities and Futures Commission (SFC) and prosecution proceedings from the Department of Justice.
Lam was sentenced to four years and four months imprisonment, while Sit and Tam were both handed sentences of six years and eight months imprisonment. Hong Kong has not seen a higher sentence attached to market manipulation charges since the establishment of the Securities and Futures Ordinance (SFO) in 2003, illustrating the city’s strict no-nonsense approach to dealing with market crimes. The SFC posted a notice on its website on July 22.
“The Court considered deterrence and punishment” to be the preferred outcomes when determining sentencing, said deputy High Court judge Douglas Yau, adding that the conspiracy was “intricately and meticulously planned”.
The sentences emphasise the Court’s “dim view of misconduct pernicious to the reputation and integrity of Hong Kong’s securities and futures markets”, said Christopher Wilson, SFC executive director of enforcement. Wilson remarked, the sentence “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”.
The illicit conspiracy involved manipulating transactions between 156 securities' accounts to create an artificial turnover of Ching Lee's shares over a span of more than five months. A misleading account of active trading and increased trading volume for the shares ensued, garnering unlawful profits of more than HK$124 million ($15.9 million). Ching Lee’s share price crashed by 90% shortly after the inflation on September 7, 2016. Ching Lee, founded in 1998, listed on the Hong Kong Stock Exchange on March 29, 2016, and its shares, at one stage, raced up to 2,000% higher than its listing price that summer.
The SFC continues to seek orders under the SFO against other local and international parties involved in the conspiracy, including the jailed trio, to “disgorge illicit profits” and to “restore affected counterparties to their pre-conspiracy positions.”
Two other alleged conspirators, Ho Ming-Hin and Simon Suen Man, are yet to be apprehended and remain the subjects of arrest warrants by the SFC.
The SFC was assisted by 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 UK’s Financial Conduct Authority, and the US Securities and Exchange Commission.
