Ex-Citic Pacific executive appeals against insider trading conviction
A former senior executive of Citic Pacific sentenced to 15 months of jail for insider dealing of the company’s shares appealed in the High Court against the conviction on Thursday.
Simon Chui Wing-nin, then an assistant director of finance, was convicted of two counts of insider dealing in the Eastern Court in November last year. He was also fined HK$1.02 million for the offences that helped him prevent a loss of HK$1.36 million.
In the Court of First Instance, Chui’s lawyers argued that he did not have a fair trial.
Senior Counsel Joseph Tse Wah-yuen said the magistrate had failed to consider their written submissions and certain evidence as he decided the verdict.
Tse also said the magistrate took an erroneous approach in testing and accepting the evidence given by an expert witness.
“The Court of Final Appeal has said in no unclear terms that where a trial was unfair, the conviction ought to be overturned,” he said.
Tse said the magistrate had convicted Chui because, according to the magistrate, he had accepted the expert’s evidence and not because of other evidence or materials presented in court.
The appeal continued before Mrs Justice Verina Bokhary on Thursday afternoon.
As part of the sentence, the magistrate had also banned Chui from sitting on the board of any Hong Kong company for three years and ordered Chui to pay HK$228,496 in investigation costs to the Securities and Futures Commission.
The SFC said in the trial that Chui sold 81,000 shares of Citic Pacific on September 9 and 12 in 2008 after he came to know that the company was facing substantial losses from trades in foreign-exchange derivatives contracts as it had bet wrongly on the Australian dollar.
The SFC found Chui had been involved in assessing the impact of the decline in the Australian dollar on some foreign-exchange derivative contracts, and he also came to know from colleagues that the company had suffered huge losses from those bets.
The company issued a profit warning on October 20, 2008, saying it had incurred a mark-to-market loss of HK$14.7 billion, which led the company’s stock to drop almost 60 per cent over the following days.
Chui sold most of his shares during the period, when he had access to information about the losses but the public did not. The SFC estimated the notional loss Chui thus averted amounted to HK$1.36 million.
Insider dealing, a criminal offence in Hong Kong, applies to cases when shares are traded on the basis of non-public, price-sensitive information to make profit or avert losses.