George William Stairs v Market Misconduct Tribunal & The Financial Secretary, HCMP 1187/2012, Hon Yuen & Fok JJA, 19 September 2012
By a report pursuant to s.252(3)(a) and (b) of the Securities and Futures Ordinance (Cap 571) (“SFO”), the Market Misconduct Tribunal (“MMT”) determined that the Applicant was culpable of insider dealing and, by a further report, made a cold shoulder order against him and ordered him to pay one third of the costs and expenses of the Securities and Futures Commission and the Government.
The Applicant sought leave to appeal, pursuant to s.266 of the SFO, against the MMT’s findings, determinations and orders. Under s.266 of the SFO, a person dissatisfied with the finding or determination of the MMT may appeal to the Court of Appeal on a point of law or, with leave of the Court of Appeal, on a question of fact. In order for leave to be granted, the proposed appeal must be one which has “a reasonable prospect of success” i.e. a real, or a sensible, as opposed to fanciful, prospect of success.
The market misconduct alleged against the Applicant was that he received relevant information about Chaoda Modern Agriculture (Holdings) Limited (“Chaoda”) in a telephone conference call, that was likely to adversely affect the share price and, being in possession of relevant information, dealt with Chaoda shares by selling 374,000 of them at HK$5.30 per share and then subsequently took part in Chaoda’s placing exercise by buying 630,000 shares at HK$4.60 per share.
The MMT was satisfied that the Applicant knew that he was in possession of relevant information and that his purpose in selling the Chaoda shares was to avoid a loss in the fund of which he was a manager, which would flow from a drop in the market price, following the announcement of the placement of Chaoda shares at a substantial discount and concluded that he was therefore culpable of market misconduct contrary to s.270(1)(e) of the SFO.
The Court of Appeal found that the proposed grounds of appeal were against findings of fact and not law and that leave to appeal was therefore required under s.266(1)(b) of the SFO. The Court of Appeal held that none of the proposed grounds of appeal gave rise to an appeal which satisfied the reasonable prospect of success threshold and that the application was totally without merit such that it was appropriate to make an order, pursuant to RHC O.59 r.2A(8), that no party may request the determination to be reconsidered at an oral hearing inter partes.
The Court of Appeal also ordered the Applicant to pay costs.