Sentencing of Hong Kong-listed Ching Lee market manipulators postponed until July

Lina Portman3 weeks ago

0 2 minutes read

The sentencing hearing of three people convicted in a high-profile market manipulation case involving Hong Kong-listed Ching Lee Holdings has been adjourned until July, according to court officials.

More time is needed to consider appropriate sentences and fines for the defendants, Douglas Yau Tak Hong, a deputy magistrate judge of the High Court, said during a hearing on Monday. The next hearing will take place on July 22.

The three convicted individuals, Sit Yi Ki, Lam Wing Ki and Tam Cheuk Hang, were convicted in historic prosecution brought by the Securities and Futures Commission (SFC) last month. This was a “highly sophisticated and complex” market manipulation case, and was also the first time that an offense under the Securities and Futures Ordinance had been tried in the court of first instance, indicated the SFC.

The trio will remain in custody pending sentencing. Nelson Ho Ming Hin and Simon Suen Man, the other two people suspected of being involved in the market manipulation case, are still at large and currently wanted by the authorities.

Ching Lee Holdings, listed on the Hong Kong secondary market GEM card, is an investment holding company mainly involved in construction, consulting and project management services in the city. The company's stock price stood at HK$0.075 per share on Monday, with a market capitalization of HK$76 million (US$9.7 million), after plunging nearly 14% this year and 99% compared to its historic peak in August 2016.

The fake trading system was planned and launched before Ching Lee's IPO on March 29, 2016 and lasted for more than five months. The conspirators artificially increased stock turnover by carrying out manipulative trades among 156 securities accounts under their control, according to the SFC.

These manipulative activities caused Ching Lee's share price to inflate by as much as 2,000 percent from the IPO price to HK$5.71 in August 2016, before a 90 percent collapse on September 7, 2016. The scheme generated illicit profits of over HK$124 million. , the market watchdog said.

The GEM board of directors of the exchange was stuck in a malaise for the last few years due to low liquidity and has sometimes fallen prey to manipulators. Formerly known as the Growth Enterprise Market, it was established in 1999 to accommodate businesses that did not meet the stricter requirements of the main board. As of the end of May, it had 323 companies with a combined market capitalization of HK$46.88 billion. In comparison, the main board has 2,287 companies with a market capitalization of HK$32.87 trillion.

More than 95 percent of stocks in the GEM universe are penny stocks, trading at less than HK$1 per share, according to Bloomberg data. The average daily turnover was HK$46 million in May, according to the exchange. datawhich is more than 60 percent below the average volume for 2023.

The S&P/HKEX GEM index has plunged 25 percent this year to hover around the lowest level since its inception in November 1999. The 45-member index, which covers about 75 percent of the market capitalization, s t has collapsed by 99 percent since its inception in November 1999. It peaked in January 2001, during the dotcom crisis in the United States.

Lina Portman

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