Ex-BNP executive, 4 others guilty of insider deals
A former investment banker at BNP Paribas Peregrine Capital has entered the history books by becoming the first insider trader to be remanded in custody in Hong Kong.
Ma Hon-yeung, a former vice-president of BNP Paribas Peregrine, and four others were found guilty in the District Court yesterday of insider dealing.
Chief District Judge Patrick Li remanded Ma for sentencing on April 1.
This was the second of only five insider dealing criminal prosecutions in Hong Kong and underscores regulators' resolve to crack down on the malpractice.
It was the first indictable trial in the District Court after insider dealing became a criminal offence under the Securities and Futures Ordinance in 2003.
Before that, no jail term could be handed down for insider trading and a tribunal could only levy a financial penalty or ban directors from sitting on company boards for up to five years.
Justice Li ruled that Ma, his girlfriend Ivy Lo Yuk-wah and three of Ma's relatives - his brother Sammy Ma Hon-kit, sister-in-law Cordelia Tso Kin-wah and nephew Ronald Ma Chun-ho - were guilty of 12 charges of insider dealing under section 291 of the ordinance.
Besides Ma Hon-yeung, the other four were allowed bail and were ordered to surrender their travel documents.
The court heard that Ma Hon-yeung used his position at BNP as part of a team working on the proposed privatisation of Egana Jewellery & Pearls in 2006 to access information about the deal.
After a few days of gathering information, he tipped off his girlfriend, his brother, sister-in-law and nephew to buy shares in the jewellery firm before the deal was announced in July 2006.
The announcement caused the share price of Egana to shoot up to HK$1.84 on substantially increased turnover of 25 million shares. This was up from a range of HK$1.35 to HK$1.61 a month before the deal was announced.
The firm was delisted in October after the privatisation.
Judge Li said the knowledge of the privatisation proposal of Egana Jewellery & Pearls and the suspension in trading was price-sensitive information and likely to materially affect the share price.
Mark Steward, the SFC's executive director of enforcement, said 'this case, being the first indictable trial for insider dealing, was a landmark decision'.
Last year, the SFC initiated five insider trading criminal prosecutions. The first conviction was made in July last year in which Vicky Hung Lai-mei, a manager at a unit of listed Sino Golf Holdings, pleaded guilty to four counts of insider trading.
One for the books
Ma Hon-yeung is city's first insider trader to be remanded in custody
The number of insider dealing charges Ma and four others were found guilty of: 12
