Precedent set by jail terms for creating false demand in trading

In a landmark case, two people were given jail terms yesterday for making a false market in share trading.

The sentences were the most severe handed down for market misconduct in Hong Kong. The most common penalties are fines, suspension or revocation of brokers' licences, or public reprimands.

Courts have sentenced market manipulators to imprisonment before but in those cases the sentences were suspended.

Mr P.C. White at Western Magistracy yesterday convicted Choy Wai-zak and Cyril Yuen Sze-ning of trading among themselves intentionally to create the misleading appearance of active trading in the shares of SAR-listed The Hong Kong Parkview Group in November 1999.

At the time of the investigation, both investors were employed by foreign exchange trading company Emperor International Exchange. Choy resigned from the company this year.

Choy was also convicted of trading shares of Parkview on November 15, 1999, in accounts with two stock brokers, which involved no change in the beneficial ownership of the shares. Choy was sentenced to imprisonment for eight months and Yuen to four months. They were ordered to pay total Securities and Futures Commission's investigation costs of HK$39,128.

Both applied for bail pending appeal on the sentences. Choy was refused bail and Yuen was granted bail of HK$30,000.