Hong Kong's District Court has sentenced two brothers, formerly senior executives of a Hong Kong-listed fashion trading company, Gay Giano International Group Limited, to prison for commercial conspiracy.
Cheung Sing-chi, former chairman, and Cheung For-sang, former executive director, face jail sentences of 13 and 16 months, and have been disqualified from holding offices as company directors for three years.
The convicts were found guilty on May 12 for conspiring to defraud company's shareholders through stock price manipulation. Evidence showed that the two, along with two stockbrokers who already pleaded guilty, had manipulated the stockbrokers' accounts so it appeared as if Gay Giano's stocks were being heavily traded in the market.
Investors who were influenced by the false impression poured in huge sums of money to buy stocks the price of which rose from HK$1.2 (15 cents) to HK$4.35 (56 cents). But the rise in share price was short-lived and the investors suffered losses when the scam was unraveled.
Judge Woo, the presiding judge, criticized the brothers' behaviour, saying it would "not only tarnish the image of [the] company, but undermine the confidence investors have in publicly listed companies". The Securities and Futures Commission, which also took part in the case by reporting to the Commercial Crime Bureau of the Hong Kong Police, has welcomed the prison sentences and the deterrent effect they will have in stopping fraudulent stock trading.
© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.