The Market Misconduct Tribunal (MMT) has found businessman Sir Dickson Poon, the founder and former Group Executive Chairman of Dickson Concepts (International) Limited (Dickson Concepts), and his investment holding company, Equity Advantage Limited (Equity), culpable of insider dealing in shares of Dickson Concepts while in possession of inside information concerning a transaction that would ultimately generate approximately HK$1.15 billion in cash for the company.
In the same proceedings brought by the Securities and Futures Commissions (SFC) in the MMT, the tribunal also found Dickson Concepts in breach of the disclosure of inside information requirements as a result of the intentional conduct of Sir Dickson Poon (Notes 1 to 3).
The case arose from PayPal Holdings, Inc.’s acquisition of Honey Science Corporation (Honey) for approximately US$4 billion in November 2019. At the material time, Dickson Concepts held approximately 3.73% of Honey’s issued share capital, a holding that was not known to the public. Following completion of the acquisition, Dickson Concepts became entitled to receive approximately US$147.6 million (HK$1.15 billion) in cash, representing a gain of approximately HK$928.7 million over the book value of its investment. This information was highly price-sensitive.
The MMT found that Sir Dickson Poon had shown an enthusiastic, positive response to the inside information when he learnt about it on 21 November 2019, describing it as “wonderful news”. He immediately calculated that the transaction would generate approximately US$120 million in profit for Dickson Concepts.
Meanwhile, Sir Dickson Poon started to trade after the blackout period ended on 28 November 2019. All told, he purchased a total of 2,756,500 Dickson Concepts shares through Equity over 13 trading days until 19 December 2019, before the information was disclosed to the market (Note 4).
The MMT further found that Dickson Concepts failed to disclose the inside information as soon as reasonably practicable, attributing the company’s breach to Sir Dickson Poon’s deliberate decision not to communicate the inside information to other personnel at Dickson Concepts including its board of directors, until late December 2019 when the company received the transactional documents. The MMT did not find Pearson Poon responsible for the company’s breach, as it was reasonable for him to rely on his father, Sir Dickson Poon, and other senior management to assess the price-sensitive information (Note 5).
Mr Michael Duignan, the SFC’s Executive Director of Enforcement, said: “The Tribunal's findings reinforce two sacrosanct principles of Hong Kong's securities market: namely, insiders, particularly senior professionals on whom others rely, must not trade while in possession of material non-public information, and listed companies must disclose price-sensitive information as soon as reasonably practicable. Since a fair and orderly market depends on investors having equal and timely access to material information, the SFC will continue to take resolute action against insider dealing and corporate disclosure failures that undermine market integrity and investor confidence.”
The MMT will determine the sanctions and consequential orders to be imposed on Sir Dickson Poon, Equity and Dickson Concepts at a later date.
Notes:
- The shares of Dickson Concepts (stock code: 0113) are listed on the Main Board of The Stock Exchange of Hong Kong Limited.
- Sir Dickson Poon was the Group Executive Chairman and Executive Director of Dickson Concepts at the material time. Equity was an investment holding company formed under a discretionary trust that had been established by Sir Dickson Poon.
- The SFC instituted proceedings in the MMT against (a) Sir Dickson Poon and Equity for insider dealing under section 270 of the Securities and Futures Ordinance (SFO); (b) Dickson Concepts for late disclosure of inside information under section 307B of the SFO, and (c) Sir Dickson Poon and Dickson Pearson Guanda Poon (Pearson Poon), an Executive Director of Dickson Concepts, for causing Dickson Concepts to breach the disclosure requirement under section 307G of the SFO. Please see the SFC’s press release dated 15 October 2024.
- Trading of Dickson Concepts shares was suspended on 8 January 2020. Trading resumed on 10 January 2020 after Dickson Concepts issued the announcement about the completion of the acquisition. On that day, Dickson Concepts’ share price reached an intra-day high of HK$5.52 per share and closed at HK$5.00 per share, representing an increase of 33.3% from the pre-suspension close.
- The MMT hearing was presided over by its Chairman, Mr Michael Lunn, G.B.S, with two lay members, Mr Claudius Tsang Sze-wai and Ms Teresa Tso Pui-sze. The MMT’s report setting out its findings is available on its website.
