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Personal assistant to listed company’s chairman convicted of insider dealing

Issue date: 2023-10-26 18:14:44

The Eastern Magistrates’ Court today sentenced Mr Wong Pak Wai to 240 hours of community service after he pleaded guilty to insider dealing in the shares of Elec & Eltek International Company Limited (E&E) following a prosecution brought by the Securities and Futures Commission (SFC) (Note 1).

Wong, who was the personal assistant to the chairman and executive director of Kingboard Holdings Limited (KBH) at the material time, was also ordered to pay a fine of $25,000 and the SFC’s investigation costs of $38,277.

The Court heard that Wong became aware of the possible privatisation of E&E proposed by KBH’s chairman and executive director in a meeting on 21 March 2020.  Knowing the possible privatisation was inside information, he went on to purchase 3,000 E&E shares through his securities account on 24 March 2020 at an average price of $10.98, before trading in the shares was suspended on the next day.

Upon resumption of trading in the shares of E&E on 3 April 2020 after an announcement of the possible privatisation, the company’s shares closed at $17.26, representing a 62.83% increase from its previous closing price of $10.6 prior to the suspension.  On 6 April 2020, Wong sold the 3,000 shares he bought on 24 March 2020 at an average price of $17.34 and made a profit of $19,080.

In sentencing Wong, the Magistrate emphasised that insider dealing is a serious offence and under usual circumstances, the appropriate sentence for such an offence should be one of immediate custodial sentence.  However, the Magistrate considered that a community service order is appropriate in this case, having taken into account the relatively small profit involved and Wong’s early admission of liability.  The Magistrate reminded Wong that he could reconsider imposing an immediate custodial sentence if Wong is not cooperative when complying with the community service order.

The SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “This case sends a clear message to the public that the SFC has absolutely zero tolerance of insider dealing, regardless of the profit pocketed, as market misconduct creates an unfair advantage at the expense of the investing public and undermines the confidence in our financial system.”

End

Note:

1. E&E was listed on the Main Board of the Stock Exchange of Hong Kong in 2011.  The shares were delisted on 25 September 2020 following completion of the privatisation of the company.

Source: SFC