Two former executives of listed firm arrested in ICAC, SFC operation against manipulation

Two former senior executives of a listed company were arrested in a joint operation between The Independent Commission Against Corruption (ICAC) and the Securities and Futures Commission (SFC) against suspected market manipulation and corrupt practices.

During the joint operation on Wednesday, the ICAC and the SFC searched 14 locations, including the offices of the listed company and SFC-licensed brokers, according to a joint statement on Friday. 

The former chairman and former executive director of the listed firm were arrested during the operation. Trading in shares of the company had been suspended since March, following a court order mandating its liquidation.

The sophisticated syndicate allegedly conspired to use documents containing false information, including internal records and public announcements, to falsely claim that the listed company had entered into a share subscription agreement and formed a joint venture with a mainland company, involving amounts of over HK$20 million, the statement said. 

They also allegedly manipulated and created false market appearances for the company’s stock through multiple nominee accounts, it noted. 

In addition, the former executive director, who then was also a director of a broker, was suspected of accepting advantages from the former chairman and misappropriating shares owned by a client of the broker worth approximately HK$9 million.

The joint operation was the result of the SFC’s initial detection of suspicious trading activities suggesting potential market misconduct and corruption, the statement said, adding that the case was subsequently referred to the ICAC for investigation into suspected corruption, while the SFC focused on market misconduct under the Securities and Futures Ordinance.