The Securities and Futures Commission (SFC), Hong Kong’s paramount securities regulator, today fined businesswoman Sun Min HK$15,629,341 ($2.00 million) for engaging in market abuse.
The SFC found that Ms Sun bought shares in China Huiyuan Juice Group Limited (Huiyuan) based on inside information accidentally provided to her and her husband.
The Market Misconduct Tribunal has found Sun Min guilty of insider trading in the shares of China Huiyuan Juice Group in connection with Coca-Cola’s failed bid to acquire the Hong Kong-listed firm.
In 2008, Coca-Cola made an offer to acquire Huiyuan, one of the China’ biggest juice producers, for HK$12.20 per share and discussions continued into March 2009 without a deal being finalised as the mainland’s authority rejected the acquisition.
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Before any public announcement had been made, Sun used her online trading account to purchase 3.13 million Huiyuan shares. But after announcement of the acquisition proposal, Huiyuan shares jumped 170 percent form HK$4.14 to HK$10.94
The authorities cited as evidence the notes of Min’s secretary in her diary. The diary entries included: “Anti-trust Law in PRC the State might not agree to sell. There are risk(s). PE may not be able to reflect the post-acquisition PE.”
In particular, the most telling point is the phrase concerning the antitrust law of China whereby the state might not agree to sell. This was seen as a direct reference to the antitrust provision, which an ordinary investor would not take into consideration unless they had knowledge of a potential takeover bid.