The Market Misconduct Tribunal (MMT) has fined Magic Holdings International Limited (Magic) and five of its directors a total of $4 million after they were found to be culpable of late disclosure of inside information on L’Oréal S.A.’s (L’Oréal) proposed acquisition of Magic in 2013 (Notes 1 to 3).
The five directors, namely, chairman, Mr Stephen Tang Siu Kun; executive directors, Mr She Yu Yuan, Mr Luo Yao Wen and Mr Cheng Wing Hong, who was also the company secretary at the material time; and non-executive director, Mr Sun Yan, were also disqualified from being a director or being involved in the management of a listed corporation or any other specified corporation, for eight to 24 months.
The MMT found that Magic’s disclosure of L’Oréal’s proposed acquisition, which would have a positive impact on Magic’s share price, had been delayed for around three months. Investors who sold their Magic shares during that time were hence ignorant of the information that they should be entitled to.
The MMT considered that Magic’s breach of the disclosure requirement was all the more serious because it had not taken all reasonable measures to monitor the confidentiality of the proposed acquisition and it had not disclosed it to the public as soon as reasonably practicable after becoming aware that the confidentiality of the proposed acquisition had not been preserved.
The MMT further ordered that:
- the Hong Kong Institute of Certified Public Accountants to take disciplinary actions against Tang and Cheng;
- Magic and the five directors to pay the SFC’s investigation and legal costs, as well as the costs of the MMT proceedings; and
- the five directors to attend an SFC-approved training programme on the corporate disclosure regime, directors’ duties and corporate governance.
Notes:
- The MMT’s reports (Part I to Part III) are available on its website (www.mmt.gov.hk).
- Magic and the five directors were ordered to pay a fine in the range of $750,000 to $1.5 million each.
- For more details, please see the SFC’s press release dated 25 March 2020.
