Market regulators have adopted a zero-tolerance policy on insider dealing which has seen a spate of criminal convictions and jail terms in recent months, with further cases pending.
A determination by the Securities and Futures Commission to pursue criminal cases in the courts, rather than seeking civil remedies, has seen five people jailed for insider dealing since April, when the first prison sentences were imposed.
In the latest case, a former CLSA Equity Capital Markets director, Allan Lam Kar-fai, was jailed for six months at the District Court last week for spreading 'office gossip' about a deal to a friend, Ryan Fong Yen-kwung, who was jailed for a year.
The trend marks a radical shift in the approach to insider dealing in Hong Kong, which was not even considered a criminal offence until 2003.
Mark Steward, executive director (enforcement) for the SFC, told the Sunday Morning Post: 'It is important insider dealing is recognised as dishonest. It is a form of cheating and once it is seen in that light, there can be no tolerance of insider dealing.'
He said the convictions 'reflect society's disapproval and condemnation of this kind of behaviour. That is a good thing. It is good we are establishing these bright clear lines'.
Under the Securities and Futures Ordinance, insider dealing can be prosecuted in the criminal courts, where it carries a maximum penalty of 10 years' jail and a fine of HK$10 million. Alternatively, the SFC can ask the financial secretary to refer cases to the Market Manipulation Tribunal for civil proceedings.