The Insider Dealing Tribunal has submitted to the Financial Secretary a report on its inquiry in relation to the listed securities of Indesen Industries Company Limited (now known as Central China Enterprises Limited).
Following is a summary of the Tribunal's report:
By notice dated February 20, 2001, the Financial Secretary required the Insider Dealing Tribunal to institute an inquiry in relation to the listed securities of Indesen Industries Company Limited (hereafter known as Indesen) to inquire into and determine -
(a) whether there has been insider dealing in relation to the company arising out of the dealings in the listed securities of the company by Mr. Huo Sheng Pu in July 1997;
(b) in the event of there having been insider dealing as described in paragraph (a) above, the identity of each and every insider dealer; and
(c) the amount of any profit gained or loss avoided as a result of such insider dealing.
The Insider Dealing Tribunal has completed its inquiry and submitted a report to the Financial Secretary on November 2, 2001.
Indesen was listed on the Stock Exchange of Hong Kong on August 18, 1992. Its principal activity is the manufacture and sale of VHS videocassettes and VHS videocassette housings.
Possible Insider Dealing
The company made two public announcements in July 1997 and August 1997. Each announcement resulted in material fluctuations in its share price. The company announced on July 17, 1997 that it would acquire Henan Hong Kong Enterprises' 80% equity interest in Henan Motor Car Repairing Company Limited. The company further announced on August 22, 1997, the acquisition of Henan (Hong Kong) Finance Limited's 100% interest in Henan (Taiwu) Electric Power Company Limited, and that Fulham Associates Limited would acquire Indesen shares from the major shareholders of Indesen. The announcements resulted, on each occasion, in a material increase in the share price of Indesen. It was alleged that Mr. Huo Sheng Pu, a director of Henan Hong Kong Enterprises and Henan (Hong Kong) Finance Limited committed insider dealing on the above occasion.
Findings and Orders
The Tribunal found that Mr. Huo had committed insider dealing and made the following orders against Mr. Huo -
(a) Mr. Huo Sheng Pu shall not, without the leave of the Court be a director, or a liquidator, or a receiver, or a manager of the property of a listed company for a period of 4 years.
(b) Mr. Huo Sheng Pu shall pay to the Government the sum of $16,540,124, being the amount of profit gained as a result of insider dealing.
(c) Mr. Huo Sheng Pu shall pay a penalty of $16,500,000.
(d) Mr. Huo Sheng Pu shall pay $315,695, being the expenses of and incidental to the inquiry and the investigation of his conduct or affairs made for the purpose of the inquiry.
A final report of the Tribunal has been submitted to the Financial Secretary and distributed to all concerned parties.
End/Friday, November 9, 2001