Former HAECO director charged with insider dealing

The Securities and Futures Commission (SFC) has commenced criminal proceedings against Mr Lam Kwong Yu, a former independent non-executive director of Hong Kong Aircraft Engineering Company Limited (HAECO), for alleged insider dealing in the company’s shares on 4 June 2010 (Note 1).

Lam appeared in the Eastern Magistracy today and pleaded not guilty to one count of insider dealing. Magistrate David Dufton fixed the pre-trial review on 9 August 2011.

The SFC alleges that Lam purchased 4,000 shares in the company on 4 June 2010 through an online securities trading account after being told about a proposed deal in which Cathay Pacific Airways Limited, a substantial shareholder of HAECO, would sell its entire stake in the company to Swire Pacific Limited. The deal triggered a general offer for all shares in HAECO and proceeded at $105 per share, representing a premium of about 25% over the market price. It was announced to the market by HAECO on 7 June 2010.

The SFC also alleges that Lam sold the shares in the company after the announcement, making a profit of $80,000.

The SFC’s investigation followed a letter from Lam’s solicitor in which Lam explained he bought the shares inadvertently without obtaining approval from the chairman of HAECO’s board of directors, as required by internal company policy.

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Note:

1. Lam resigned as an independent non-executive director of HAECO on 6 June 2010.