Director guilty of insider trading
Former civil aviation chief Albert Lam Kwong-yu was convicted of insider trading yesterday and handed a suspended jail sentence at Eastern Court.
Lam (pictured), the 66-year-old former Civil Aviation Department director, was sentenced to five months in prison, suspended for two years. He was also fined HK$50,000 and ordered to pay half the investigation cost sought by the Securities and Futures Commission (SFC), totalling HK$107,131.
Lam was convicted of using insider knowledge of a deal involving Hong Kong Aircraft Engineering Company (Haeco), where he sat as non-executive director, in buying shares at the firm.
The SFC said he netted more than HK$79,000 in profit. Lam alleged he was intoxicated when he purchased the shares online.
Lam was described by Deputy Magistrate John Glass as 'not frank or reliable' and selective in giving his defence. He said Lam's offence had hurt public confidence in Hong Kong as a financial hub.
'It is always sad for a man of your status to fall hard from grace for a fairly small sum of money,' Glass said. 'It was a single transaction, the amount involved was relatively small and had brought no impact as it had been declared by the authority, and you have destroyed your reputation.'
The court said Lam used price-sensitive information he obtained as an officer at Haeco, and acquired 4,000 Haeco shares on June 4, 2010, shortly before trading closed at 4pm.
The purchase came a trading day before Swire Pacific acquired 15 per cent of the company's stock from Cathay Pacific on June 7.
He traded minutes after he was notified of the sensitive information at 3.13pm by Haeco CEO Augustus Tang Kin-wing that an urgent board meeting would be held at 6pm on June 4 about the Swire Pacific offer.
In delivering yesterday's verdict, the judge dismissed Lam's claim that the online trade was made when his mind was impaired by alcohol. Lam said he had five glasses of drinks at a luncheon.
The judge said that to complete the trade, Lam had to check e-mails, open a bank webmail account, type in details such as a share number and user name, move between webpages and transfer money to a security account when he came up short - all tasks that required an alert and fully conscious mind.
'The dealing is not a slap decision, not an automatic one,' Glass said.
The magistrate also ruled it was 'unbelievable' that Lam did not realise until the next day that he had breached trading rules. He also noted Lam had not purchased Haeco stocks for four years until the sensitive data came to his knowledge.
In mitigation, Lawrence Lok Ying-kam SC said Lam had shown remorse, with Lam voluntarily telling Tang about the trade, and that he later notified the SFC.
Lam joined the Civil Aviation Department at the age of 18 and retired as its director in 2004.