A CHANGE of heart has caused Giordano International and merchant bankers Crosby Capital Markets (Asia) some pain this week. Less than 12 hours after substantial Giordano shareholder, Jimmy Lai Chee-ying, apparently denied there were plans afoot for a placement of his shares, the deed was done overnight in London and New York. Confusion remains about who said what to whom and when. On Tuesday Giordano told the stock exchange rumours of a placement of Mr Lai's shares were not true. There were no 'definite' plans for such a transaction, the company said. That night the 191 million shares involved, representing 27 per cent of the issued share capital of Giordano, were sold at $7.60 each, raising Mr Lai $1.45 billion. On Wednesday Giordano shares were suspended from trading while talks went on presumably between the exchange, Giordano directors, Mr Lai and the merchant bankers involved, Crosby. Giordano said it was advised on Tuesday morning of Mr Lai's earlier intention - not to sell his shares. The stock exchange was informed of this at about 10.28 am. Then at 5 pm, the same day, we are told negotiations began between Crosby and Mr Lai regarding a potential sale of his shares. Agreement to sell the shares came at 11 pm. Not to miss out on anything, the Securities and Futures Commission on Thursday confirmed it was looking at what happened to see whether there had been any breaches of the Securities Ordinance. A similar turn of events occurred in October 1992 in a share placement at Bank of East Asia. The merchant banker involved was SBCI Finance Asia. On October 27 Bank of East Asia did a $1.89 billion placement of 52.6 million shares at $36 each, a discount to the close of the day of $37.50. The transaction came after rumours of the possibility of such a transaction were apparently denied. Confusion over who said what to whom and when exploded into a series of corporate statements issued by Bank of East Asia to try to clear up the mess. The story goes, on October 21 the bank approached SBCI requesting them to consider arranging a placement of up to 15 per cent of its shares. The next day SBCI told the bank it did not have internal approval for such a deal. Representatives from another financial institution then entered the fray later the same day. After preliminary discussions the financial institution advised the bank not to consider a placement at that time. In the light of this advice it decided not to proceed with a placement. On October 23 things began to go wrong. Press reports and rumours were emerging of a placement at Bank of East Asia. The stock exchange told the bank it had received reports of staff at the other financial institution approaching investment institutions about the bank's shares. The indication was given to the investment institutions a mandate had been given by the bank to do a placement. The exchange urged the bank to clarify what was going on. That same day the bank decided to issue a clarification saying no placement was planned. The statement was sent to the exchange and it flashed up on broker screens all over the territory in trading. Then SBCI got back to Bank of East Asia on October 26. The merchant banker said it now had internal permission to do the placing. In the light of this new approach, and given a good wind behind the stock market, Bank of East Asia decided to go ahead with the placement on October 27. This incident and similar incidents triggered an exchange review of listed company information dissemination. The controversy and the publicity it attracted apparently got directors at Bank of East Asia, including chief executive David Li Kwok-po, pretty mad. An apology to the public was issued on December 2. It said: 'BEA acknowledges that members of the public may have misunderstood the announcement dated October 23 to have meant that BEA was committing itself not to make a placing of shares.' It accepted the public might have been misled and there might have been a breach of its listing agreement. The bank said it regretted the misunderstanding and the agreement breach. That was not the end of it. A week later the SFC issued a statement reprimanding SBCI under the Securities ordinance. The regulator said SBCI went to Bank of East Asia and actively solicited, accepted and completed the mandate for the placing of the bank's shares only four days after the bank told the public it had no immediate plans to arrange any placement. In doing this the SFC said SBCI acted without waiting for the necessary steps to be taken to ensure that the perception in the market resulting from the bank's no placement statement was either corrected or eroded by the passage of time before intermediating the placement. The SFC decided that SBCI's performance fell short of its duty as an investment adviser to act in an efficient, fair and honest manner and that its action was, or was likely to be, prejudicial to the interests of the investing public. Also the SFC said the commission expected intermediaries to adhere to the highest standard of behaviour in their market activities to protect the integrity of the Hong Kong market and to protect the interests of the investing public. The commission said it took this kind of thing very seriously and in future would take active steps to stop any repetition of the events in October 1992.