NewHearings in Citic market misconduct case start today

Tribunal hearings begin today in the keenly anticipated case of mainland conglomerate Citic and five former directors, including princeling and ex-chairman Larry Yung Chi-kin, on market misconduct charges relating to massive undisclosed foreign exchange losses.

To be heard by the Market Misconduct Tribunal, the case is part of a wider action taken against Citic and its directors by the Securities and Futures Commission.

The tribunal will hear claims that billionaire Yung and four former directors were either "reckless" and/or "negligent" to sign off on an exchange filing that was "false or misleading as to a material fact or was false or misleading through the omission of a material fact", a tribunal document shows.

The four are former deputy managing directors Leslie Chang Li-hsien and Peter Lee Chung-hing, former managing director Henry Fan Hung-ling and former executive director Chau Chi-yin.

Son of former vice-president Rong Yiren, Yung built Citic into a conglomerate with a range of businesses from telecommunications, property, steel making and mining.

The case dates from 2008 when Citic revealed HK$14.7 billion in losses stemming from a foreign exchange hedging product that was meant to protect the company's Australian mining investment against adverse changes in the Australian dollar.

According to a tribunal document, Citic directors were aware of the "material" losses by September 9, 2008, but on September 12, 2008, the directors signed off on an exchange filing saying they were "not aware of any material adverse change in the financial or trading position of the group".