Insider dealing sends China Automation’s secretary to jail
The Eastern Magistrates’ Court today sentenced Mr Chow Chiu Chi, company secretary of China Automation Group Limited, to 45 days of imprisonment for insider dealing. The harsh sentence was issued after he was convicted of insider dealing in the shares of China Automation following a prosecution by Hong Kong’s Securities and Futures Commission (SFC).
Chow was also ordered to pay a fine of $45,000 and the SFC’s investigation costs of $37,029.51.
“Chow’s position as the company secretary of China Automation enabled him to have access to inside information. By using this inside information to profit from trading the company’s shares, he gained an unfair advantage in the market and abused the trust of the company,” said the SFC’s Executive Director of Enforcement, Mr Thomas Atkinson.
“Insider dealing is a serious criminal offence. The SFC will continue to strive to bring criminal proceedings to deter such market misconduct,” Mr Atkinson added.
The court heard that on 11 April 2016, Chow became aware that a letter in relation to a possible general offer would be issued to the directors of China Automation and he was instructed to liaise with the legal representatives of China Automation and The Stock Exchange of Hong Kong Limited to arrange suspension of trading. He received the letter at about 2:21 pm on the same day.
Before the trading suspension which took place at around 3:12 pm on 11 April 2016, Chow, who knew that the possible general offer was a piece of inside information, purchased a total of 534,000 China Automation shares through his wife’s securities account between 1:57 pm and 3:03 pm.
On 12 April 2016, China Automation published an announcement in relation to the possible general offer. Upon resumption of trading in China Automation shares on 13 April 2016, the company’s share price rose up to $1.20, which represented 18.81% increase from the previous closing price of $1.01.
Between 14 and 21 April 2016, Chow sold some of the China Automation shares and made a profit of $7,417. The notional profit of the shares remained unsold was $36,865.