A former fund manager for US investment giant Fidelity Management was banned Wednesday from trading in Hong Kong for two years because of insider dealing. George Stairs sold shares of Chinese company Chaoda Modern Agriculture Holdings Ltd using inside information before an announcement of a share placement was made public in 2009.
After four months of court hearings, the Hong Kong Market Misconduct Tribunal (MMT) ruled that "Stairs (was) culpable of market misconduct, namely insider dealing." Acting on insider information, Stairs allegedly sold HK$1.98 million worth of Chaoda shares at HK$5.30 each before the placement and bought back HK$2.90 million worth of shares at HK$4.60 afterwards.
In a report by the MMT last month, Stairs said that the placement price of HK$4.60 per share was "surprisingly low". Stairs claimed that he received what he thought was an "update" from Chaoda Modern Agriculture's Chairman Kwok Ho and Chief Financial Officer Andy Chan in a conference call in 2009 when he learned about the share placement. "If we had checked...we would have seen there was no (public) announcement...I blame myself for not checking further," Stairs, who was also fined a total of HK$859,654 (US $110,700), said in the same report.