A former director general of the Civil Aviation Department appeared in Eastern Court yesterday accused of using insider information to buy shares in advance of an acquisition of Hong Kong Aircraft Engineering Company, earning almost HK$80,000 in profit.
Albert Lam Kwong-yu, 66, pleaded not guilty to insider trading. He denied abusing price-sensitive information he obtained as a non-executive director of Hong Kong Aircraft Engineering Company (Haeco) to acquire 4,000 Haeco shares one trading day before Swire Pacific acquired 15 per cent of the company's stock from Cathay Pacific on June 7, 2010.
The alleged misconduct took place ahead of Swire's announcement of a general offer to buy Haeco shares from all shareholders at a price about HK$20 higher than it closed at on the last trading day.
Lam is being prosecuted by the Securities and Futures Commission for making a profit of HK$79,436. He has resigned from Haeco.
Augustus Tang Kin-wing, chief executive officer of Haeco, testified yesterday that he told Lam on June 3 about an urgent meeting to be called on the evening of June 4. He called Lam again at about 3.15pm on June 4, informing him that the meeting was in relation to Swire's intended acquisition of 15 per cent of Haeco shares from Cathay, and the buyout would trigger a general offer, Tang said.
On the morning of June 5, Tang said, Lam had called. '[Lam] told me that he mistakenly placed a buy order of 4,000 [Haeco] shares yesterday morning,' Tang said. 'He said he made a mistake and was willing to take any punishment from the board, including resignation.'
Tang said Lam changed his account of the purchase. Tang said Lam first told him that the purchase was made on the morning of June 4. But after he told Lam that the company would include Lam's purchase of stock in a public announcement of the share purchase on June 7, Lam confessed that he bought the 4,000 shares on the afternoon of June 4, after Tang told him why the meeting was being called.
