HONG KONG: At District Court, yesterday, four people were found guilty in Hong Kong's largest market manipulation case - conspiring in rigging and inflating the prices of Asia Standard Hotel Group (ASH Group) shares.

Among the four defendants, Chan Chin-yuen, described as having played "the most important role" by Deputy Judge Johnny Chan in this severe market abuse, was sentenced to a 30-month prison term. Chan's sister-in-law, Elaine Au Yeung Man-chun, his brother Chan Chin-tat and a friend, Chui Siu-fung, were all sentenced to 26 months behind bars, with fines for each of HK$288,400.

The Securities and Futures Commission (SFC) alleged, and the court concurred, that from August 1 to September 5, 2005, Chan Chin-yuen funded his three co-conspirators and repeatedly traded largely among themselves to create a false or misleading impression of the degree of investor interest in the stock. The SFC said the false trading constituted more than 50 percent of ASH Group shares traded during the period

The case is the first indictable prosecution for market manipulation in Hong Kong under the Securities and Futures Ordinance (SFO), which came into force in 2003. The SFO raised the penalty for market manipulation up to a maximum of 10-years imprisonment and HK$10 million in fines.

Judge Chan said it was a public concern for Hong Kong to establish a well-functioning fair market. He said that what the four had done not only harmed interests of the investors, but also damaged the reputation of the Hong Kong stock market globally.

Chan Tak-ching, senior manager of enforcement from the SFC, said the false trading in this case raised the share price of ASH Group by 78 percent, which ramped up the company's market capitalization by HK$4 billion, both figures setting records for market manipulation cases in Hong Kong.

(HK Edition 11/27/2009 page1)