SFC fines Chung Nam HK$800,000 over PCCW share records

Chung Nam Securities, a stockbroker implicated in the vote-rigging controversy that eventually scuppered Richard Li Tzar-kai's attempt last year to privatise PCCW, has been fined by the Securities and Futures Commission.

The SFC found Chung Nam did not keep adequate records of orders it carried out to buy 132 board lots of PCCW shares between January 13 and January 16 last year. The stockbroker was fined HK$800,000, while two employees designated by the SFC as responsible officers, Cheng Wai Chung and Ng Kwai Cho, were fined HK$250,000 each.

In May last year, the Court of Appeal ruled in favour of the SFC's bid to block the privatisation, on grounds that a shareholder vote on February 4 had been manipulated.

In a High Court judgment in April last year, Justice Susan Kwan Shuk-hing said Chung Nam had purchased 132 board lots of PCCW shares between January 13 and January 20 last year. Kwan found that Chung Nam then transferred the shares among the accounts of clients and staff to 'boost the headcount' of people who voted for Li's buyout.

Kwan said that one of Chung Nam investors who signed a proxy form agreeing to the buyout was an elderly, illiterate woman who told the SFC she had no idea she had opened an account with the stockbroker.

The judge said Eugene Chuang, who controls Chung Nam, financed the purchase of 125 of the 132 board lots himself.