Director guilty of insider trading in Huiyuan Juice
The Market Misconduct Tribunal has found businesswoman Sun Min guilty of insider trading in the shares of China Huiyuan Juice Group in connection with Coca-Cola's failed bid to acquire the Hong Kong-listed firm. The tribunal cited as evidence the notes of Min's secretary Tera Cheung in Cheung's diary.
Coca-Cola had attempted to acquire Huiyuan, one of the mainland's leading juice makers, but in March 2009, the Ministry of Commerce rejected the acquisition on the grounds that the US soft drink giant would dominate the mainland market.
The tribunal found Min guilty of insider dealing of 3.13 million Huiyuan shares on August 7, 8, 12 and 29, 2008.
Min and her husband Peter Mok Fung were directors and shareholders of Transfield Resources, a shipping and trading company.
Huiyuan shares were suspended on September 1, 2008, at HK$4.14 per share. Trading resumed on September 3, 2008, with an announcement by Coca-Cola of its proposal to acquire Huiyuan for HK$12.20 per share. On September 3, 2008, Huiyuan's share price jumped 164 per cent to HK$10.94.
For the Huiyuan shares of which the tribunal found Min guilty, she used Cheung to trade those shares, the tribunal said. A diary kept by Cheung contained handwritten phrases pertaining to Huiyuan.
The diary entries included: "Anti-trust Law in PRC the State might not agree to sell. There are risk(s). PE may not be able to reflect the post-acquisition PE".
The tribunal said: "The diary entries show that Min [and possibly Peter] had knowledge of a potential takeover of Huiyuan. In particular, the most telling point is the phrase concerning the antitrust law of China whereby the state might not agree to sell. This is in direct reference to the antitrust provision, which an ordinary investor would not have in their contemplation unless they had knowledge of a potential takeover bid. Clearly, Min had been tipped off by a connected person with this information about the takeover bid that was likely to materially affect the share price of Huiyuan."