The Hong Kong Securities and Futures Commission (SFC) has been granted an interim worldwide injunction to freeze assets of up to HKD43mn (USD5.5mn) held by two individuals involved in suspected insider trading of Asia Telemedia (ATML) shares, it announced on Friday.
At this stage, the SFC has identified approximately HKD31.2mn held in the bank accounts of two individuals, referred to in the case as 'C' and 'D,' as well as in the bank accounts of two British Virgin Islands companies controlled by 'C'.
The Court has suppressed the identities of 'C' and 'D.' These bank accounts are now frozen under the terms of the interim worldwide injunction. The SFC is continuing to make inquiries to identify more assets up to the value of HKD43,661,568.
The SFC’s action was based on evidence and suspicions that 'C' sold approximately 100 million shares through his own and suspected nominees’ accounts, between 27th April and 30th May, 2007.
Investigations by the SFC found that these transactions occurred before ATML informed the market that a winding up petition had been served on the company and that winding up proceedings had commenced.
The sum of money frozen by the injunction is the loss that appears to the SFC to have been avoided by 'C' in selling approximately 100 million ATML shares before news of the statutory demand and winding up petition became generally known.
The injunction serves to prevent the dissipation of assets pending the finalisation of the SFC’s investigation, and to ensure there are sufficient assets to satisfy any financial penalty, compensation or disgorgement orders, if relevant proceedings are commenced and orders are made against 'C.'
The Court was told that 'C' is a PRC resident who did not appear to be residing in Hong Kong, and that the SFC suspected that 'C' had transferred most of the sales proceeds through 'D' to overseas bank accounts.
The SFC sought the interim worldwide injunction on an ex parte basis (i.e. on the absence of notification to any of the defendants).
The case returned to the High Court on 2nd May where legal representatives appeared for 'C', 'D' and the two BVI companies. The Court gave directions for filing further material with it, and adjourned the hearing of the case to a date to be fixed, being not less than 10 weeks from Friday's hearing.
The SFC will not disclose any further details about the investigation, which is continuing.
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