SFC prosecuted Mr Li Kam Shing for creating a false and misleading appearance of active trading in the shares of Sino Technology Investments Ltd and for misleading SFC in its investigation. He pleaded guilty to six summonses at Eastern Magistracy. The Court adjourned sentencing to 28 Jun 2007 pending probation order and community service order suitability reports.
SFC investigation revealed that between Aug and Nov 2002, Li used four securities accounts with four different broker firms using the name Ms Wan Wai Chi Katherine to buy and sell his own shares in Sino Technology. These transactions did not involve any change of ownership of the shares because Li set up the transactions to ensure he traded with himself at all times through the four accounts. This kind of trading, which is called wash trading, manipulated the market for Sino Technology shares by inflating turnover and volume, and ultimately fixing an artificial price.
SFC investigation also revealed that Li had provided misleading information to an SFC investigator. He falsely denied during an interview with SFC that he knew Wan. SFC was ready to issue six summonses against Li in Feb 2005. At this point Li disappeared and proceedings could not be served on him. Li was believed to be in China. He was eventually tracked down in Apr 2007 after he opened a new mobile phone account in HK. SFC then issued the six summonses heard at Eastern Magistracy.
As stated by SFC, it would not give up pursuing offenders who think they can evade justice by leaving HK and returning when they think the coast is clear.
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