Hong Kong insider-trading arrests send ‘very strong message’ on market integrity

Arrests in a HK$315 million (US$40 million) insider dealing case underscore Hong Kong’s commitment to upholding the integrity of its stock market amid a surge in new listings and share placements, according to industry players.The Independent Commission Against Corruption (ICAC) on Thursday said it had arrested eight people after joining forces with the Securities and Futures Commission (SFC) earlier this week to raid premises connected to a hedge fund and two securities firms.The joint action, the largest by the two agencies in recent years, was related to a hedge fund owner that allegedly paid HK$4 million to executives of two financial firms to obtain confidential information about the share placement plans of listed companies, using the information to gain HK$315 million via short selling, the ICAC and SFC said in separate statements.“This joint operation of the ICAC and the SFC sent a very strong message to the market that Hong Kong will not tolerate insider dealing or other malpractices related to share placements or new listings,” said Wilson Chan, adjunct professor at City University, who was a banker for three decades before joining academia.Insider dealing refers to someone who uses confidential corporate information to trade stocks to earn profits or avoid losses, which is a criminal offence under Hong Kong law.“Hong Kong is one of the largest fundraising hubs for mainland and international companies,” Chan said. “It is important for the SFC and ICAC to crack down on any corruption or insider dealing to uphold the integrity of the stock market, for Hong Kong to be an international financial centre.”