Sale of Lai holding in Giordano scrutinised
THE Securities and Futures Commission (SFC) is believed to be studying the $1.45 billion sale of shares in Giordano International by Jimmy Lai Chee-ying to see whether he has breached a securities ordinance which carries a fine of $50,000 and imprisonment of two years on conviction.
On Tuesday, Mr Lai sold his 27 per cent stake in Giordano, the clothing retailer he founded, just hours after Giordano told the market through the stock exchange that he had no definite plans for a sale.
Shares in Giordano resumed trading yesterday gaining 3.77 per cent or 30 cents to $8.25 on a day when the Hang Seng Index shed 1.2 per cent.
The exchange suspended the stock on Wednesday after finding that the placement was executed by Crosby Capital Markets in London on Tuesday night.
Regulatory sources said the SFC was looking at Securities Ordinance 138 in particular.
That ordinance states: A person shall not make 'any statement which is, at the time and in the light of the circumstances in which it is made, false or misleading with respect to any material fact and which he knows or has reasonable ground to believe to be false or misleading.' A legal source said no charge had been made under Securities Ordinance 138 for some years.
Deputy-chief executive of the exchange, Herbert Hui Ho-ming, said on Wednesday there had been 'misinformation in the market'.
Crosby Securities yesterday defended the sale. Managing director Mark Martyrossian said there were no negotiations with Mr Lai on Tuesday morning and therefore Mr Lai's statement was accurate.
He said neither the SFC nor the stock exchange had approached Crosby for clarification.
On Tuesday, Giordano shares were up 0.3 per cent to $7.95, after tumbling more than 7 per cent on Monday on rumours of the sale.
Giordano yesterday said the share sale would not cause a change to its business. It will announce the results of Mr Lai's placement today.
