Illegal skimming practices by brokers to generate secret profits are commonplace on the Hong Kong stock market, the High Court heard yesterday.
Barrister John Wright claimed that his client, former stockbroker Michael Wong Chi-fai, was following a trade trend when he stole $35 million through unauthorised deals.
'There is a rather lax attitude towards the use of shares in Hong Kong by brokers,' Mr Wright said.
'Everyone's standards are very poor. . . . One can understand why a man with Michael Wong's background was tempted to let his standards fall.' Wong, 35, was the settlement manager of Exchange Square-based Sassoon Securities.
He admitted, yesterday, that between March 1995 and August 1995 he began unauthorised dabbling in the market, using Sassoon accounts to sell short.
Selling shares short generates profits only when the market price drops. In Hong Kong, only certain stocks can be sold this way to avoid illegal market manipulation. Unfortunately for Wong, the market jumped 34.51 per cent between March 1, 1995, and the end of August, 1996, and he had to cover his losses using 'the proceeds of the sale of stolen shares to acquire replacement shares'.
Mr Wright said: 'The vast majority [of money] creamed off the top had to be put back in when the market rose on him after he short sold.