VST chairman gets six months in jail
Li Jialin is the first chairman of a listed company to be convicted of a market manipulation offence
VST Holdings' Li Jialin has become the first chairman to be put behind bars for manipulating the share price of the Hong Kong-listed company.
The District Court yesterday sentenced Li to six months' imprisonment for price-rigging in VST shares and fined him HK$240,000 for failing to disclose his interest in the company's shares as required by the local securities law. Li was also ordered to pay investigation costs of HK$168,282 to the Securities and Futures Commission.
This is the first time the chairman of a listed company has been convicted of a market manipulation offence since the Securities and Futures Ordinance came into effect in 2003.
The court also banned Li from being a director of a listed company for one year. As a result, Li yesterday resigned as executive director, chairman and chief executive of VST, a mainland-based distributor of information-technology products.
The announcement issued by VST last night did not mention the sentence but only said Li had resigned with effect from yesterday "due to his personal reasons and unavailability for serving the company for a period of time". It said "there are no matters relating to his respective resignation that need to be brought to the attention of the shareholders of the company".
VST said operations director Chow Ying-chi, who has been with the company for 16 years, had been appointed acting chief executive with no additional fee to be paid.
Non-executive director Tay Eng Hoe has been appointed chairman and will not receive any fees for the additional role.
Li was found guilty by the District Court last week after an eight-day trial in September before Judge Douglas Yau. He was convicted of 10 counts of price-rigging and 16 counts of failure to disclose his interest in VST's shares.
The court heard that between August 2007 and January 2008, Li operated three securities accounts: one in his name, another jointly with his wife and a third in his brother's name. He bought and sold VST's shares through these accounts but in effect, he owned all the shares.
The judge found these transactions led to a surge in the stock price of VST before a share placement in October 2007. The deals also helped the company report a better year-end performance in its stock price.