On 22 July 2024, the Court of First Instance sentenced Ms. Sit Yi Ki and Mr. Tam Cheuk Hang to six years and eight months in prison, and Ms. Lam Wing Ki to four years and four months, following their conviction in a jury trial for conspiracy to carry out false trading in the shares of Ching Lee Holdings Limited. This verdict follows extensive investigations by the Securities and Futures Commission (SFC) and prosecution by the Department of Justice.

This landmark case concluded on 29 May 2024 with a historic 22-day jury trial, marking the first instance an offense under the Securities and Futures Ordinance (SFO) had been tried at the Court of First Instance. The nine-member jury unanimously found Sit and Tam guilty of conspiracy to commit false trading, while Lam was found guilty by a majority verdict.

The SFC’s investigations revealed that between March 2016 and September 2016, Sit, Lam, Tam, and other co-conspirators orchestrated a complex scheme to manipulate the market. They conducted transactions among 156 securities accounts under their control, creating a deceptive appearance of active trading and artificially inflating the trading volume for Ching Lee shares. This fraudulent activity generated illicit profits exceeding $124 million.

Deputy High Court Judge Douglas Yau, in his sentencing remarks, emphasized the intricately planned nature of the conspiracy, underscoring its scale, sophistication, and international dimensions. He highlighted the paramount importance of deterrence and punishment in preserving the integrity of Hong Kong as a preeminent international financial center.

Christopher Wilson, the SFC’s Executive Director of Enforcement, remarked, “The severity of these sentences reflects the Court’s stringent stance on misconduct detrimental to the reputation and integrity of Hong Kong’s securities and futures markets. This sends a resounding message to potential wrongdoers that market manipulation will be met with severe legal consequences.” Mr. Wilson further noted that the successful prosecution shows the SFC’s unwavering commitment to leveraging its extensive resources and statutory powers to combat market abuses and maintain robust investor confidence.

In conjunction with the criminal proceedings, the SFC has initiated proceedings under section 213 of the SFO against various local and international corporations and individuals, including Sit, Lam, and Tam. These proceedings aim to disgorge their ill-gotten profits from the manipulative scheme and restore affected parties to their pre-transaction positions. The SFC has secured interim injunctions to freeze assets totaling up to $124.9 million, representing the combined profits derived from the fraudulent trading activities.

The SFC acknowledged the invaluable assistance of numerous international regulatory and law enforcement agencies, including the China Securities Regulatory Commission, the Hong Kong Independent Commission Against Corruption, the Monetary Authority of Singapore, the Ontario Securities Commission, the Singapore Police Force, the United Kingdom Financial Conduct Authority, and the U.S. Securities and Exchange Commission.

This landmark case sets a precedent and exemplifies the SFC’s enhanced investigative capabilities and highlights the judiciary’s resolute role in enforcing stringent penalties to deter market manipulation, thereby ensuring investor confidence and upholding ethical business practices within Hong Kong’s financial markets.

(Source: Market Manipulation Case)