The Market Misconduct Tribunal (MMT) has found Ms Cynthia Chen Si Ying, the former company secretary of Asiasec Properties Limited (previously known as Dan Form Holdings Company Limited) (Dan Form), and her Mainland associate, Mr Wen Lide, had engaged in insider dealing in the shares of the company and ordered them to disgorge over $1 million in illicit profit (Notes 1 to 4).
The MMT also disqualified Chen from participating in the management of Asiasec Properties Limited or any other listed corporation in Hong Kong without leave of the court for four years (Note 5) and recommended the Hong Kong Chartered Governance Institute to take disciplinary action against her.
The inside information possessed by the pair concerned the sale of Dan Form’s controlling stake. In a joint announcement on 22 September 2016, Dan Form, Tian An China Investments Company Limited (Tian An) and Autobest Holdings Limited (Autobest), a wholly-owned subsidiary of Tian An, disclosed a conditional agreement for Autobest to acquire 36.45% of Dan Form’s total issued share capital from Mr Dai Xiaoming, the then chairman, chief executive and executive director of Dan Form, at a price of $2.75 per share.
The MMT found that:
- Chen was already in possession of inside information regarding the proposed acquisition of Dai’s interest in Dan Form on 2 September 2016. She disclosed this information to Wen, knowing or having reasonable cause to believe that Wen would use the information to deal in Dan Form shares; and
- Wen dealt in Dan Form shares whilst in possession of inside information. He purchased 1,250,000 Dan Form shares between 5 and 19 September 2016, through his securities account at Shenwan Hongyuan Securities (H.K.) Limited (Shenwan Hongyuan), and 250,000 Dan Form shares on 6 September 2016 and 50,000 Dan Form shares on 12 September 2016, through his own and his wife’s securities account at Grand Investment (Securities) Limited, respectively.
The MMT also found that Chen had an interest in Wen’s dealing in Dan Form shares through his Shenwan Hongyuan account.
The MMT considered Chen’s misconduct to be serious because: (i) she was the company secretary at Dan Form, (ii) she was entrusted by Dai to assume a managerial role in Dan Form, (iii) she counselled and procured Wen to buy Dan Form shares while in possession of inside information, and (iv) she obtained illicit profits through a layering process involving the accounts of other individuals, aimed at hiding their source.
Based on its findings, the MMT ordered Chen and Wen to jointly and severally disgorge $794,347 and Wen to disgorge $206,067, which represent the profits they gained from insider dealing in Dan Form shares (Note 6). Both were also ordered to pay the costs and expenses incurred by the Government and the SFC.
Other orders imposed by the MMT include cold shoulder orders for four years against Chen and Wen, which ban them from dealing in any securities, futures contract, leveraged foreign exchange contract or collective investment scheme in Hong Kong (Note 7); and cease and desist orders prohibiting Chen and Wen from engaging in any conduct which constitutes market misconduct.
Notes:
- Please see the Securities and Futures Commission (SFC)’s press releases dated 23 April 2024 and 21 January 2025.
- Dan Form shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on 28 February 1973. Its name was changed to Asiasec Properties Limited with effect from 9 June 2017.
- Wen did not participate in the proceedings. The MMT is satisfied that Wen had been afforded a reasonable opportunity to be heard, enabling the MMT to make orders against him.
- The disgorgement orders were made under section 257(1)(d) of the Securities and Futures Ordinance (SFO), requiring any profit gained or loss avoided by the person to be paid to the Government.
- The maximum period of the disqualification order is five years.
- The MMT has further ordered that, pursuant to section 259 of the SFO, Chen and Wen shall pay compound interest on the disgorged sum of $794,347 and $206,067 respectively, calculated from 26 October 2016 with yearly interests.
- The maximum period of the cold shoulder order is five years.
- The MMT reports setting out its findings and the reasons of making the relevant orders are available on its website.
