Chui’s sale of Citic Pacific shares to avoid losses “speaks for itself,” Magistrate Li Kwok-wai said today in Hong Kong’s Eastern Magistrates’ Court.
Chui, now chief financial officer of Agile Property Holdings Ltd. (3383), had pleaded not guilty to two counts of selling Citic Pacific shares after becoming aware of the company’s losses not yet made public. Citic Pacific, controlled by China’s biggest state-owned investment company, fell 55 percent on Oct. 22, 2008 after it disclosed potential losses of as much as HK$15.5 billion ($2 billion) from wrong-way currency bets.
He sold a total of 81,000 shares on Sept. 9 and Sept. 12 and avoided losses of as much as HK$1.36 million, according to Hong Kong’s Securities and Futures Commission. “This was blatant insider dealing,” the SFC’s executive director of enforcement, Mark Steward said in a statement.
Chui’s lawyer Joseph Tse said his client would consider an appeal after considering factors including the sentence. He faces as long as three years in prison in total for the two counts under the magistrates ordinance.
Another hearing in the case was scheduled for Nov. 27.
Chui was employed by Citic Pacific until June 30, 2010, according to the SFC. He joined Agile Property in July 2010 to be responsible for accounting, corporate finance, and investor relations. Chui has taken a “more limited role” due to a pending legal proceeding, Agile said in a March statement.
Rachel Wang, an investor relations officer for Agile said the company didn’t have an immediate comment on the verdict.
Citic Pacific’s bets on the Australian dollar prompted a bailout from its parent Citic Group, which is backed by China’s cabinet, and the resignation of its then chairman Larry Yung.
Hong Kong’s Department of Justice said last year, during a trial over disputed documents, that there was “clear evidence” Citic Pacific defrauded four banks before Oct. 20, 2008, when it sought financing without disclosing the losses.
Citic Pacific directors acted properly, a lawyer for the company has said. The company declined to comment today, according to Tim Payne, a Hong Kong-based spokesman at Brunswick Group, which handles media relations for Citic Pacific.
The company entered into the currency contracts to hedge its exposure to the Australian dollar as it was developing an iron ore mine in Australia’s Pilbara region.
The case is Securities and Futures Commission and Chui Wing Nin, ESS27729/2011 in Hong Kong’s Eastern Magistrates’ Court.
To contact the editor responsible for this story: Douglas Wong at firstname.lastname@example.org