Insider Dealing Tribunal submitted report on Hanny Holdings Ltd

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The Insider Dealing Tribunal has submitted to the Financial Secretary a report on its inquiry in relation to the listed securities of Hanny Holdings Limited (formerly known as Hanny Magnetics (Holdings) Limited).

Following is a summary of the Tribunal's report:

Insider Dealing Tribunal -

Hanny Holdings Limited

(formerly known as Hanny Magnetics

(Holdings) Limited)

Introduction

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By notice dated 16 December 1998, the Financial Secretary required the Insider Dealing Tribunal to institute an inquiry in relation to the listed securities of Hanny Holdings Limited (formerly known as Hanny Magnetics (Holdings) Limited (hereafter known as Hanny) to inquire into and determine -

(a) whether there has been insider dealing in relation to Hanny arising out of the dealings in the listed securities of the company by Messrs. WONG Sun, WONG King Lim, William FUNG Wai Kwong and Louis LO Yuen Fai, Ms. FAY Loi Loi, Ms. Connie LI Wai Chu and Ms. Sanrita WONG Kwok Mei during the period from 11 July 1994 to 2 August 1995 (both dates inclusive);

(b) in the event of there having been insider dealing as described in paragraph (a), the identity of each and every insider dealer; and

2. The Insider Dealing Tribunal has completed its inquiry in respect of liability; that is, to identify those persons who did or did not commit acts of insider dealing, and has submitted a report in that regard to the Financial Secretary on 10 April 2000.

The Company

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3. Hanny became a listed company in Hong Kong on 16 December 1991. The principal activities of Hanny were then the manufacture of magnetic products and the marketing and sale of computer accessories and consumer electronic products. Shortly after its listing, Hanny acquired the exclusive right to use 'Memorex' trademark on certain of its audio and video tapes and computer magnetic media products.

4. The company made three public announcements within the period of the inquiry. Each announcement resulted in material fluctuations in its share price. The company announced respectively on 1 September 1994 and 20 September 1995 a sharp decline in profits and, on the second occasion, a loss attributable to its shareholders. This resulted, on each occasion, in a material fall in its share price. There was, however, a sudden increase in the share price following an announcement of a business deal with another company, namely BASF Plc., on 6 February 1995. It was alleged that Messrs. WONG Sun, WONG King Lim, William FUNG Wai Kwong and Louis LO Yuen Fai, Ms. FAY Loi Loi, Ms. Connie LI Wai Chu and Ms. Sanrita WONG Kwok Mei, committed insider dealing on one or more of the above occasions.

Findings

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5. The Tribunal concluded in its report to the Financial Secretary that, by unanimous decision, it had found that Messrs. WONG Sun, William FUNG Wai Kwong and Ms. Sanrita WONG Kwok Mei, all at one time directors of Hanny, had committed insider dealing. Also by unanimous decision, the Tribunal found that any dealing ostensibly in the names of Connie LI and FAY Loi Loi during the period from 11 July 1994 to 2 August 1995 did not constitute insider dealing by them as they had done no more than lend their names to nominee accounts operated under the direction of WONG Sun.

6. Finally, the Tribunal, upon a direction of law, resolved to report to the Financial Secretary that it was unable to make any findings in respect of Messrs. WONG Kim Lim and Louis LO Yuen Fai and that the inquiry should remain open in respect of these two persons. The Tribunal had been unable to service notice of the inquiry on WONG Kim Lim whose whereabouts have remained unknown. Louis LO Yuen Fai remained always outside of the jurisdiction and the Tribunal found that, in his absence, there was insufficient evidence to enable it at this time to come to any finding.

7. In respect of the requirement to determine the amount of profit gained or loss avoided and thereafter to make consequential orders and penalties, the Tribunal will proceed to hear representations at an early date.

End/Thursday, April 13, 2000

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