The Eastern Magistrates’ Court convicted Cheng Chi Fei and Wong Kin on April 27 of illegally short selling in the shares of China Agri-Products.
The traders face a fine of $16,000 and will pay the Hong Kong Securities and Futures Commission’s investigation costs.
Cheng and Wong applied for rights shares of China Agri-Products in March, the court heard.
Before the rights issue became unconditional and the result of the allotment of rights shares was announced, Cheng illegally sold 2.97 million China Agri-Products rights shares, while Wong sold 5.5 million of the same through his friend’s account in the capacity of an authorised person.
The Hong Kong Securities and Futures Commission said the pair contravened Section 170 of the Securities and Futures Ordinance, which prohibits the sale of securities when a person does not have a presently exercisable and unconditional right to sell them.