Judge endorses exoneration of suspect in case brought by securities regulators
Securities regulators have failed to reverse a decision to acquit a futures trader for a commodities offence likened to 'a bit like trying to sell drugs in front of a policeman'.
In the one and only prosecution of an individual for 'employing a device, scheme or artifice to defraud' under Hong Kong's repealed Commodities Trading Ordinance, the High Court yesterday upheld a decision to exonerate Yang Chih-chen.
Mr Yang had been accused by the Securities and Futures Commission of trying to defraud a purchaser of September 2002 Hang Seng Index futures contracts in July that year by inputting a pair of equal and opposite 'limit orders' during the pre-opening period to ensure the calculated opening price would be fixed at 10,570.
An alert was issued by the regulatory surveillance system, based on the difference between a theoretical price it calculates and the opening price actually executed. Such alerts are prompted where the divergence is more than 50 points. In this case, it was 217 points.
Although he believed him to be manipulative, the magistrate found that Mr Yang, operating a discretionary account in the name of his father-in-law at Top Equity Derivatives, may not have known or believed the price to be artificial or unreasonably high.