Insider trader keeps Sogo post, to pay HK$34m fine

PUBLISHED : Saturday, 16 December, 2006, 12:00am
UPDATED : Saturday, 16 December, 2006, 12:00am

The Insider Dealings Tribunal yesterday ordered Thomas Lau Luen-hung, managing director of Lifestyle International Holdings, to pay HK$34.16 million in penalties for insider trading seven years ago.

However, he was allowed to keep his directorship of Lifestyle International Holdings, a listed company that operates the Sogo department stores in Causeway Bay and Tsim Sha Tsui.

Mr Lau was found guilty in September of using insider information between September 14 and 20 in 1999 in a deal involving property developer Asia Orient Holdings. The tribunal found that Mr Lau received information on a share swap between Asia Orient and China Infobank from his business partner, Tija Boen Sien, and from Asia Orient's managing director, Richard Poon Jing, before the deal was made public on September 22, 1999.

In addition to the HK$34.16 million penalty, Mr Lau was banned from directorships in the listed property developer Chinese Estates Holdings and metal-casting parts maker United Metals Holdings for one year from Friday.

The penalty was made up of a 'profit disgorgement' (forfeiture of illicit profit) of HK$15.3 million, a fine of HK$15 million and inquiry costs of HK$3.86 million.

The maximum penalty for insider dealing offenders can be up to three times the profit made, and a ban on directorships of any listed company for up to five years.

But the tribunal allowed Mr Lau to remain as managing director of Lifestyle due to delays in its own proceedings and to the Securities and Futures Commission's tacit approval. The SFC listed Lifestyle in 2004 with Mr Lau as an executive director only after the inquiry into the Asia Orient deal had started.

'The tribunal finds this to be a powerful argument,' said a report on the tribunal chaired by High Court Judge John Saunders.

The tribunal noted that the delays amounted to three years and five months, between December 1999, when the investigation began, and May 2003, when the tribunal received notice that a formal inquiry would be conducted.

Mr Lau's lawyer argued that Mr Lau did not know he was to be the subject of an insider-dealing inquiry despite having asked the SFC about this. Had he known, he would not have listed Lifestyle.

The tribunal said that an 'exceptional situation' had arisen in the Lifestyle case. 'The mere fact of the delay by itself will not normally be sufficient to justify the exercise of discretion in favour of an insider dealer,' its report said.