The Securities and Futures Commission (SFC) commenced legal proceedings under section 213 of the Securities and Futures Ordinance against six defendants in relation to allegations of insider dealing in the shares of Schramm Holding AG (Schramm) (Notes 1 and 2).
The six defendants were Lee Sung Ho, Chang Se Lee, and four companies – Empress Fair Ltd (Empress Fair), Winwell Global Trading Limited (Winwell), SSCP Holdings (HK) Ltd and STM Corporation (STM).
In December 2011, the SFC obtained an order for interim injunction to freeze the assets of the defendants.
The SFC alleged that Chang and Winwell bought Schramm shares before the 30 June 2011 announcement of a proposed takeover by Salvador AG. The takeover announcement came after discussions between SSCP Co Ltd, represented by Lee, and Akzo Nobel N V, the parent of Salvador AG (Note 3).
The SFC also alleged that the share price of Schramm rose by 160% after the takeover announcement and that Chang and Winwell sold the shares they had bought and transferred the proceeds out of Hong Kong through a number of entities including Empress Fair. The proceeds also went into the account of South Korea-based STM.
Based on information provided by the South Korean authorities, the SFC believed that STM was owned by SSCP Holdings (HK) Ltd, a substantial shareholder of Schramm prior to the takeover and whose interests in Schramm were the subject of the takeover. Later information provided to the SFC asserted that STM was not connected to SSCP Holdings (HK) Ltd at the time of the alleged insider dealings.
Following a hearing in June, the Court ordered that the claims against SSCP Holdings (HK) Ltd be struck out and that interim injunction in relation to three other defendants be discharged.
The SFC discontinued its action against Chang, Empress Fair and Winwell and also against Lee who provided some evidence to the effect that he no longer held interests in Winwell and another company involved in transferring the proceeds.
The SFC’s investigation is continuing.
Notes:
- The SFC’s legal proceedings commenced on 21 December 2011. The SFC did not issue a press release about this case when it started because no publication order had been made by the Court.
- Schramm was delisted from the Stock Exchange of Hong Kong Ltd on 2 April 2012 after completion of the takeover by Salvador AG.
- SSCP Co Ltd, which is based in the Republic of Korea (South Korea), is the parent of SSCP Holdings (HK) Ltd.
- The judgment is available on the Hong Kong Judiciary website at http://www.judiciary.gov.hk/.
