BNN Bloomberg Former HK market surveillance official accused of tipping friends

(Bloomberg) — Three people, including a former head of Hong Kong’s securities regulator, have been charged with conspiring to commit misconduct for allegedly sharing nonpublic information about a planned rights issue and profiting from it.

The statement shows that Kenneth Leung, 30, who was employed as head of the Securities and Futures Commission’s investment products division, and Lai Lit-wai, 34, a Hospital Board nurse, face one count of conspiracy to commit committing misconduct in public office from the city’s Independent Commission Against Corruption, late Friday. It said Leung and Cheung Tsz-kin, 35, a senior government adviser at the Justice Department, are jointly facing another charge on the same charge.

All three were released on bail pending a hearing on Saturday.

It is alleged that Leung obtained confidential stock price-sensitive information between January 30 and February 15, 2023 in connection with the rights issuance of Link REIT and secretly shared it with the other defendants. Lai and Cheung allegedly used the information to buy and sell puts, making a combined profit of more than HKD 11 million ($1.4 million), and then split a portion of the profits with Leung.

Link REIT, one of Asia’s largest real estate investment funds, planned a HK$19.3 billion rights offering in February last year to raise capital. Shares fell the most since 2008 on the trading day following the plan’s announcement.

According to the statement, the SFC referred the case to the anti-corruption watchdog after an internal investigation revealed suspected misconduct by Leung. The securities regulator said in a separate statement that an investigation found that the former employee operated alone at the organization but worked with two outside parties. The SFC said it was looking into potential breaches of the Securities and Futures Regulations.