HONG KONG-Hong Kong’s bustling capital markets have seen many cunning and sophisticated attempts to turn a profit by less- than-scrupulous means.
Sky Cheung’s was not one of them.
On Wednesday, Mr. Cheung, a local stock broker and financial columnist, was fined 500,000 Hong Kong dollars, or about $65,000, by the Securities and Futures Commission and had his brokering license suspended for 30 months.
The regulator found that 25 times between March 2009 and March 2010, Mr. Cheung had bought stocks through an undisclosed account registered in his wife’s name and, shortly afterwards, published newspaper columns talking up those stocks.
‘‘Cheung put himself in a conflict-of-interest position by purchasing the stocks shortly before favorable comments were published in his column and sold them at a profit shortly after publication of the column,’’ the commission said Wednesday in a statement. ‘‘Cheung’s conduct has cast serious doubt on his ability to carry on the regulated activity competently, honestly and fairly, as well as his reputation, character and reliability.’’
Hong Kong’s financial watchdog has scored a number of successes in recent years as it seeks to crack down on market malfeasance, including a high-profile criminal conviction of a Morgan Stanley managing director for insider trading, and a current push to make the banks that sponsor initial public offerings criminally liable for the accuracy of disclosures made by the companies they are bringing to market.
Mr. Cheung’s missteps were of a more mundane nature. Licensed brokers in Hong Kong are permitted to trade on the side for personal profit, but must disclose this to their employers and have the activity vetted by their senior managers. Mr. Cheung did not declare his activity to his employer at the time, the local brokerage Quam Group (He now works at the Hong Kong unit of Taiwan’s Polaris Securities).
According to the regulator, Mr. Cheung’s tactic was to buy stocks through his wife’s account and then write positively about them in his column ‘‘Investment Sky,’’ which appears twice a week in the popular Chinese-language newspaper Apple Daily. He would then typically cash out at a profit between one and three days after publication.
On several occasions, he would write the columns first, and instruct his assistant to delay their publication until after he had time to buy the stocks he was pumping, the regulator said. Other times, Mr. Cheung denied any holdings in the stocks he was writing about, although they had been purchased through his wife’s account. The regulator said its fine was equal to the profit he made on his undisclosed trades.
In his most recent Apple Daily column on Friday, Mr. Cheung did not single out specific stocks, but waded into a local debate about whether authorities in China and Hong Kong have been over-regulating the market and scaring away investors. He cited the Chinese saying that ‘‘fish are caught where the waters are muddy,’’ then turned it around.
‘‘Of course there are no fish when the water is clear,’’ he wrote. ‘‘But if the water is too muddy that will kill a lot of fish.’’
