Securities and Futures Commission v. Grover Akashdeep

HCMA627/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 627 OF 2007

(ON APPEAL FROM ESCC 10088 OF 2007)

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BETWEEN

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Before : Hon Tong J in Court

Date of Hearing : 24 July 2007

Date of Judgment : 21 August 2007

Date of Handing Down Judgment : 23 August 2007

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J U D G M E N T

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1.The appellant was summoned for the following offence, pursuant to sections 114(3)(a) and 114(9) of the Securities and Futures Commission Ordinance, Cap. 571 :

“Information has been laid THAT YOU, Akashedeep Grover, did without reasonable excuse, during the period from on or around 15 June 2004 to on or around 08 March 2006 perform a regulated function in relation to a regulated activity namely, dealing in securities, carried on as a business by ICICI Bank Limited when you were not licensed to do so.”

2.The appellant pleaded guilty and admitted the relevant facts which stated, inter alia, that :

“	1.	The defendant worked for ICICI Bank Limited (‘ICICI Bank’) from April 2003 and was transferred from India to Hong Kong in January 2004 to work as a Relationship Manager in the Private Banking Department.  The defendant worked for ICICI Bank in Hong Kong during the period from on or around 15 June 2004 to on or around 08 March 2006 (‘the relevant period’).
	2.	PW1 a manager of the SFC states that, during the relevant period, the defendant was not licensed with the SFC and was not registered with the Hong Kong Monetary Authority as a relevant individual.
	3.	PW2 a manager of the SFC interviewed the defendant and the defendant confirmed that during the relevant period he solicited clients including PW3, PW4 and PW5 to deal in securities through ICICI Bank.
	…
	7.	During the relevant period the defendant, without reasonable excuse, performed a regulated function in relation to a regulated activity namely, dealing in securities, carried on as a business by ICICI Bank, when not licensed, contrary to sections 114(3)(a), 114(9) of the SFO.”

3.Having heard the mitigation from the appellant, who was then acting in person, the magistrate imposed a fine of $4,000, and ordered him to pay costs to the Securities and Futures Commission in the sum of $2,456.

4.There was no appeal by the appellant within the statutory time limit.  However, he took out an application for an extension of time for giving Notice of Appeal dated 8 June 2007.  The application was granted on 12 June 2007.

5.In the Reasons for Sentence, the magistrate accepted that the appellant was merely acting under the instruction of the bank in question.  He was employed on a fixed salary basis and his income was not dependent upon commissions derived from the offending transactions.  Now the defendant had found a position with a different bank.  The magistrate gave the following reasons for imposing the sentence :

“	8.	I accept that the Bank is mainly culpable and answerable to the subject offense. The fact that the defendant has acted in good faith, however, does not, in my judgment, exonerate him. He has worked, in management level at the Bank, for nearly two years―not a short period of time by any standard. He has actively played the role of soliciting three clients, who are PW3 to PW5 as set out in Brief Facts, to deal in securities through the Bank. It is fortunate, and indeed a mitigating factor, that there is no evidence to suggest that anyone has suffered any financial loss resulting from the conduct of the defendant.
	9.	The defendant has sensibly provided full cooperation to the Commission, coupled with his plea of guilty, which is a strong sign of remorse, and clear record, these are mitigating factors most favorable to him. I, in sentencing, have to take into account the need to protect the reputation of Hong Kong as an international finance city, which takes decades to build. After considering and balancing the background of the case, the defendant’s personal factors, including his means, and principle of totality, I regard $4,000 fine appropriate.”

6.Counsel for the appellant had put forward a number of grounds in support of the appeal against the financial penalty.  It was contended that :

“	(1)	The fine of $4,000 imposed was manifestly excessive.
	(2)	There was such disparity of sentence as between the appellant’s fine and the conditional discharges imposed upon all the other former colleagues employed in the same role by the same bank committing the identical offence, namely:―
		Vijay Solomon	in ESS 10087/2007
		Lara Rath	in ESS 10089/2007
		Manoj Cheruparambil	in ESS 10090/2007
		Sambit Mangaraj	in ESS 10091/2007
	That there is a real & justifiable sense of grievance and further that the sentence imposed was such that it may objectively be viewed as an aberration.
	(3)	There is such disparity of sentence as between the fine of $40,000 imposed on the ICICI Bank (the appellant’s employer at the material time) and the appellant that objective observers may rightly view the appellant’s fine as manifestly excessive; particularly bearing in mind that the employer bank instructed the appellant to carry out the very function which offended the Securities & Futures Ordinance and for which he was summoned and fined.”

7.Mr Surman had prepared a skeleton submission expanding on the grounds of appeal and Mr Bell, for the respondent, had given his replies on those matters.  As part of the appellant’s case touched on the sentence imposed on one Lara Rath, I had asked for the relevant transcript to be provided to the court.  Further submissions had been made by both sides after the transcripts were made available.

8.Of the various issues raised by the appellant, I must make one point clear at the outset.  Mr Surman had stressed many times that the appellant’s new employer would dismiss him if he was not given a conditional discharge for the offence.  Even if that were true, this court could not be persuaded by such kind of argument.  Whether the appeal should be allowed must depend on the merits and not what the new employer requires; and the court’s function is not to make decisions to facilitate the appellant’s employment.

9.Having said that, as I see it, the main issue of the appeal is whether the disparity between the appellant’s fine and the conditional discharges received by some other defendants, particularly Lara Rath, was justified.  In the case of Lara Rath, she was given a conditional discharge by the same magistrate, Mr Symon Wong, who had imposed the fine on the appellant in the same afternoon.

10.On the issue of disparity of sentence, the respondent had rightly reminded this court that the cardinal duty of the sentencing court would be to pass a sentence commensurate with the gravity of the offence (Yuen Chau v. R [1964] HKLR 93), and where different sentences were passed on different accused for the same offences by different judges on different occasions, the Court of Appeal would only consider whether the sentence passed on the appellant was appropriate (HKSAR v. Leung Yiu Ming [2001] 1 HKLR 247).  As for the disparity cases resulting from sentencing by the same judge at the same time, the respondent referred this court to the case of HKSAR v. Chan Chi Fai, CACC 432/2005, which stated :

“A sentence would not be reduced on the basis of disparity unless there was such a glaring difference between the treatment of one defendant compared with one or more other defendants by the same judge at the same time so as to give rise to a real sense of grievance, and where such difference was not justified by any relevant distinction in their culpability or personal circumstances…”

11.The respondent submitted that the appellant and Lara Rath were not dealt with by the magistrate at the same time and there were different circumstances involved in these two cases.  Hence, the respondent argued that the different sentences were justifiable and the appellant’s alleged sense of grievance was groundless.

12.The respondent had identified the following differences between their cases : the period of the offence for Lara Rath was about one month whereas the appellant’s case continued for a period of 21 months; the appellant had handled more clients; Rath was employed by ICICI Bank in India and she was transferred by them to work in the Hong Kong office, by contrast, the appellant had lived in Hong Kong for 10 years, and had been serving in different financial institutions since 2001.  He had far less of an excuse for being ignorant of the regulatory requirements of Hong Kong; Lara Rath had given birth to her first child while studying for her examinations and had made inquiries of the Bank.  The question is whether these differences would justify a different category of sentence for the appellant.

13.Even if there were apparent differences between the two cases, one cannot ignore the crucial similarity.  The appellant, like Lara Rath, was found by the magistrate to have acted in good faith in promoting the products for the Bank, but good faith was not a defence in the context of the present offence.  “Having acted in good faith” must be the most significant factor in relation to the sentence.  If there were no material distinguishing features, then there would be no rational reason why the two cases should be treated differently.

14.First of all, from the facts admitted by the appellant, it appeared that the appellant had also worked for the Bank in India and he was later transferred to Hong Kong as a Relationship Manager.

15.On the length of time working in Hong Kong, I am not sure it is an important factor.  But for the sake of argument, if the defendant should know about the regulations as he had been in Hong Kong longer, one could also say that Lara Rath should exercise more caution to check the regulation first, or even get independent legal advice, before she would take up the position in a new place.  Furthermore, I do not think, in this kind of cases, family circumstances such as having a baby should have any impact on the sentence.

16.I also failed to see how the number of clients could make a meaningful difference in terms of the appellant’s culpability.  As he had worked for a longer time, he must have obtained more customers for the Bank, if indeed he was acting in good faith.  The magistrate had duly noted that the clients had not suffered any financial loss, which he accepted as a mitigating factor; and furthermore, there was no dispute that the appellant had derived no extra financial benefit from these transactions.  In the circumstances, having recruited more clients for the Bank would not indicate a higher degree of culpability justifying a sentence of a different category.

17.Of course, it would have been different if the circumstances suggested that the appellant should have known or that there was some basis for him to suspect that he was not entitled to conduct the transactions but he nevertheless took the risk to do so.  I do not think such circumstances existed in this case.

18.Having considered all the submissions, I came to the view that there were no rational distinction between the case of the appellant and Lara Rath and they should have been given the same category of sentence, although there was about an hour’s difference in their sentencing time.  And the conditional discharge would be the appropriate sentence in these circumstances. 

19.Hence, I shall allow the appeal and set aside the fine.  I shall order that the appellant be conditionally discharged on his own recognisance for the sum of $3,000 for a period of 12 months.  For the avoidance of doubt, the order of costs made by the magistrate shall stand.

Mr Adrian Bell of the Securities and Futures Commission, for HKSAR

Mr Giles Surman, instructed by  Messrs Laracy Gall, for the Appellant