A former Slaughter and May lawyer and her boyfriend who worked for Linklaters LLP lost a bid to dismiss a Hong Kong Securities and Futures Commission lawsuit alleging they used inside information to trade shares.
Young Bik Fung, Lee Kwok Wa and his two sisters made HK$2.9 million ($374,000) trading shares of Hsinchu International Bank ahead of a takeover offer by Standard Chartered Plc and of Asia Satellite Telecommunications Ltd. before a privatization offer, the SFC says.
Hong Kong High Court Judge Anthony Chan yesterday dismissed their application to strike out the SFC’s lawsuit on grounds including that the regulator lacked jurisdiction as the trading of Hsinchu shares took place in Taiwan. The four said they bought the shares of the two companies in 2006 and 2007 without any inside information.
Maurice Lee, a lawyer for the four, didn’t immediately respond to an e-mail requesting comment. Neil Hyman, a partner at Slaughter and May in Hong Kong, declined to comment on the case.
Lee Kwok Wa “left this firm in 2007,” Amanda Clarke, a spokeswoman for Linklaters in Hong Kong, said by e-mail. “We have no comment to make on his personal legal proceedings.”
The SFC, which is asking the court to order the four to disgorge any profits and pay damages, won confirmation of its power to independently sue parties suspected of market misconduct at Hong Kong’s top court this year.
The regulator said in a statement yesterday that its allegation in the Hsinchu case is for fraud rather than insider trading because the trades took place in Taiwan. The case was delayed by the appeal to Hong Kong’s top court, it said.
Young, who worked on the Hsinchu Bank offer while assigned to Standard Chartered by Slaughter and May, tipped off Lee and his sisters to buy the shares before the deal was announced, the SFC said. Lee was working at Linklaters while it was advising Citic Group on the proposed privatization of Asia Satellite, the regulator said.
Young and Lee’s sisters accounted for 73 percent of the trading of the company’s shares the day the deal was announced, the SFC said.
The case is Securities & Futures Commission v Young Bik Fung et al. HCMP2575/2010 in Hong Kong’s Court of First Instance.