Securities regulator getting tougher on insider dealings
The Securities and Futures Commission has in recent years become a fearsome tiger, no longer the toothless one it once had a reputation for being.
Since it began the crackdown on insider trading and market manipulation, it has had to contend with criticism for pursuing smaller, local cases of wrongdoing, as well as countering a widespread attitude that a little insider dealing was no big deal. But the persistence of its campaign has paid off. It has helped to educate the public that market manipulation is not a victimless crime. Rather it incurs an enormous cost to society. Recent high-profile cases have sent an unmistakable message that the commission means business.
Its latest case involves pressuring giant developer Cheung Kong (Holdings) and its related companies to unwind sales of The Apex Horizon hotel suites. Few people thought the transactions were a matter of concern for the commission. But its investigation found that the sales had allegedly breached rules governing collective investment schemes that involve small investors. It took a pro-active stance while other government departments were acting like bystanders.
Meanwhile, the commission last month won a landmark case in the Court of Final Appeal, which upheld its right to seek compensation for investors from US fund house Tiger Asia Management over insider dealings in the city. The court ruled that it could proceed without having to prove first that the fund was guilty of insider trading or other malpractices in a criminal court or the Market Misconduct Tribunal.
The commission first used the law successfully last year when it took Hontex International to court and secured an order for the sport fabric maker to cough up HK$1.03 billion to compensate small investors over misleading information in its prospectus.
Such successful enforcement puts companies, large and small alike, on their toes. Hong Kong needs that to maintain a level playing field and its status as a global financial hub.