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PROFESSIONAL SERVICES/LEGAL | Staff Reporter, Hong Kong
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Magic Holdings penalised for late disclosure of inside information

The company and five of its directors were fined a total of $4m.

The Market Misconduct Tribunal (MMT), an independent body established under the Securities and Futures Commission, has penalised Magic Holdings International Limited for late disclosure of inside information on L’Oréal S.A.’s proposed acquisition of Magic in 2013.

The company and five of its directors were fined a total of $4m. The company and the directors will also pay the SFC’s investigation and legal costs, as well as the costs of the MMT proceedings. 

Company chairman Stephen Tang Siu Kun and executive directors She Yu Yuan, Luo Yao Wen, and Cheng Wing Hong—who was also the company secretary at the material time—and non-executive director Sun Yan were also disqualified from being a director or being involved in the management of a listed corporation or any other specified corporation for eight to 24 months.

MMT also ordered the Hong Kong Institute of Certified Public Accountants to take disciplinary action against Tang and Cheng and have the five directors attend an SFC-approved training programme on the corporate disclosure regime, directors’ duties and corporate governance.

In the course of its investigation, MMT found out that Magic’s disclosure of L’Oréal’s proposed acquisition, which would have a positive impact on Magic’s share price, had been delayed for around three months. Investors who sold their Magic shares during that time were hence ignorant of the information that they should be entitled to.

The MMT considered the breach was all the more serious because it had not taken all reasonable measures to monitor the confidentiality of the proposed acquisition and it had not disclosed it to the public as soon as reasonably practicable after becoming aware that the confidentiality of the proposed acquisition had not been preserved.
 

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