The former manager used inside information from a deal Morgan Stanley was advising on to generate HK$4.2mn in profits for herself and a friend.
A Hong Kong court has granted an interim injunction order allowing the freezing of about HKD 8.2 million in assets in an insider dealing case.
The case was brought by the SFC (Securities and Futures Commission), which suspects two individuals – Ms Tsang Ching Yi and Mr Barry Kwok Sze Lok – of engaging in insider trading in the stock of I.T Limited, a software company that was privatised in 2021.
The SFC alleged that Tsang obtained information relating to the privatisation of I.T Limited through her employment as a manager at an investment bank, and shared such information with her friend Kwok, before both traded in the stock using the inside information.
Though not named in the SFC’s statement, the investment bank was identified through Tsang’s licensing record to be Morgan Stanley – which was the adviser for I.T Limited’s privatisation offer.
The SFC said Tsang and Kwok bought 2.844 million I.T shares through Kwok’s securities accounts in October and November 2020. After the proposed privatization was announced in December 2020, they immediately sold the shares, yielding profits of HKD 4.1 million.
Tsang and Kwok have both left Hong Kong and have “taken steps to remove their assets from Hong Kong”, the SFC said.
In light of the “clear risk of dissipation”, the SFC considered that it was necessary to obtain a freezing order to prevent Tsang and/or Kwok from further transferring their assets, including the suspected illicit gains of their trading, out of Hong Kong and to ensure any future orders made by the court and/or Market Misconduct Tribunal can be fulfilled if they are found liable for insider dealing.
With the court’s approval, the amount being frozen represents twice the amount of profits gained by Tsang and Kwok.