Last week Hong Kong Police arrested 15 people on suspicion of conspiracy to defraud and money laundering by manipulating shares of Next Digital (282.hk), inducing a lot of criticisms.
This week SFC demonstrated how it professionally sanctioned a retail investor who manipulated the market.
Yesterday SFC announced that the Eastern Magistrates’ Court has convicted Mr Ke Wen Hua of false trading in the shares of Carry Wealth (643.hk) following a prosecution by SFC.
Let's have a look at SFC's investigation findings:
- Ke began accumulating Carry Wealth shares in May 2011 and acquired most of his holdings in Carry Wealth shares at a price between $0.48 and $1.30 until Sep 2011.
- On 4 Sep 2012, Ke conducted trading in Carry Wealth shares through 6 securities accounts under his control. In doing so, the share price of Carry Wealth was pushed to reach as high as $0.6 which was 50% higher than the preceding day’s closing price of $0.4. On the same day, Ke’s trading generated a trading volume of 58.6 million Carry Wealth shares, approximately 3,000 times the average daily trading volume of Carry Wealth shares during the previous 10 trading days.
- Consequently, Ke was able to dispose of Carry Wealth shares at artificially inflated prices through his false trading and reduce the total of his trading losses by approximately $887,220.
Ke's trading had created extreme results (soaring price and turnover), otherwise SFC's prosecution would be an uphill battle. He pleaded guilty to the offence and was fined only $30,000 (and also ordered to pay SFC’s investigation cost), not very punitive. More importantly, Ke's market misconduct happened 8 years ago but SFC commenced criminal proceedings against him in July 2020. This case seems like a delayed justice.
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