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Former banker ordered to disgorge $3 million illegal gains from insider dealing

Issue date: 2024-07-30 17:02:56

The Market Misconduct Tribunal (MMT) has ordered Mr Wu Kam Shing, a former executive deputy general manager of China CITIC Bank International Limited, to disgorge close to $3 million in ill-gotten gains after the Tribunal found that he had engaged in insider dealing in the shares of Bloomage BioTechnology Corporation Limited (Bloomage) following proceedings brought by the Securities and Futures Commission (SFC) (Notes 1 to 4).

Between March 2017 and June 2017, Wu worked with a team of staff members of the bank in respect of a loan transaction to finance Grand Full Development Limited’s offer to privatise Bloomage.

As soon as the loan was approved by the bank on 22 May 2017, Wu, in possession of the inside information, started acquiring Bloomage shares – using his wife’s securities accounts he controlled and his personal trading accounts – accumulating a total of 1,275,000 shares before the privatisation scheme was announced to the public some three weeks later. Wu then disposed the majority of the shares, making a profit of $2,971,604.43 (Note 5).

The MMT, apart from ordering Wu to disgorge the illicit profit from his insider dealing, also made the following orders against him:

• a disqualification order prohibiting him from being a director, liquidator, or receiver or manager of the property or business, or be concerned or take part in management of any listed or unlisted corporation in Hong Kong, without leave of the court, for three years, effective from 29 July 2024;
• he is banned from dealing in securities, futures contracts, leveraged foreign exchange contracts or collective investment schemes in Hong Kong for three years, effective from 29 July 2024;
• he is not to engage in any conduct which constitutes market misconduct;
• he is to pay the Government and the SFC costs and expenses; and
• the MMT report be referred to the Accounting and Financial Reporting Council with a recommendation to take disciplinary action against Wu (Notes 6 to 11).

End

Notes:

1. The MMT was heard before the MMT Chairman, Mr Michael John Hartmann.
2. Please see the SFC’s press releases dated 9 March 2018 and 3 May 2023.
3. A report which sets out the reasons of making the relevant orders is available on the MMT’s website.
4. Bloomage was listed on the Main Board of the Stock Exchange of Hong Kong Limited from 3 October 2008 to 1 November 2017 before it was privatised.
5. The remaining shares of Bloomage were cancelled pursuant to the privatisation.
6. Under section 257(1)(a) of the Securities and Futures Ordinance (SFO), an order prohibiting a person to take part in the management of a listed company without the leave of the Court of First Instance.
7. Under section 257(1)(b) of SFO, an order has the effect of prohibiting a person who is the subject of the order from any dealings, directly or indirectly, in the Hong Kong financial market for the length of the order.
8. Under section 257(1)(c) of the SFO, an order to prohibit a person who is the subject of the order not to engage in any form of market misconduct in the future.
9. Under section 257(1)(d) of the SFO, an order that the person shall pay to the Government an amount of any profit gained or loss avoided by the person as a result of the market misconduct in question.
10. Under sections 257(1)(e) and (f) of the SFO, orders that a person shall pay costs incurred by the Government and the SFC.
11. Under section 257(1)(g) of the SFO, an order that any body which may take disciplinary action against the person as one of its members be recommended to take disciplinary action against him. At the material time, Wu was a Certified Public Accountant – a defined professional person under the Accounting and Financial Reporting Council Ordinance.

Source: SFC