Manipulation probe by SFC
The Securities and Futures Commission (SFC) is investigating suspected market manipulation in 20 stocks by several organised groups of traders last year.
Director of enforcement Mark Dickens yesterday said the investigations were the top priority of the enforcement division, of which he took charge this year.
He said the number of alleged manipulation cases being investigated was double the number last year - a rise he said could be due to heightened market activity last year.
'The SFC has sent out notices to brokers to collect trading information of the 20 stocks which are suspected to have been manipulated,' he said. 'It takes about 18 months to two years for the SFC to collect evidence about cases before any action can be taken.' Mr Dickens believes there are organised groups behind the active trading which has seen some stocks shoot up by as much as 200 per cent in a day. He said there was no target list of people under investigation in relation to manipulation because the investigation was based on actual stocks and not on individuals.
He said no case had been prepared for prosecution yet because the SFC needed to have evidence beyond doubt before a prosecution could be made.
Market manipulation is a criminal case.
Mr Dickens said that despite the difficulty in prosecuting such cases, manipulation should not be changed into a civil matter.
'Even if the evidence is not ready to go to court, the SFC may reprimand the brokers and the stock exchange can reprimand the listed companies related to the manipulation activities,' he said.
'I think the current situation is good enough and does not need to be changed.' Last week Real Grant was fined $650,000 in the High Court for failing to comply with SFC notices to supply banking and trading records relating to an investigation into alleged manipulation of shares in Dah Hwa International (Holdings), Ngai Hing Hong Co, Chaifa Holdings and Wing Fai International between April 1995 and February last year.
These stocks were among the 20 being investigated, Mr Dickens said.
Real Grant's principal shareholder and director is Victor Choi Hok-wan, an active trader of small stocks in the Hong Kong market.
Neither he nor Real Grant is a broker regulated by the SFC or the stock exchange.
Mr Dickens said if those suspected of market manipulation were neither a broker nor a listed company, and there was not enough evidence to take the case to the court, the SFC would report the matter to the Government and the public to disclose the findings of the investigation.
He said Real Grant had given boxes of bank and trading records to the SFC under the order of the High Court and the investigation was making good progress.
Mr Dickens said the enforcement division was investigating 170 cases, which included misconduct by brokers, insider dealing and alleged market manipulation.
He refused to say whether the SFC was investigating the 344 per cent rise in turnover last week in the shares of Shun Shing Holdings two days before Cosco (HK) Property Development raised its stake from 30 per cent to 61 per cent and triggered a general offer.