HKSAR v. Lam Kar Fai, Allen and Another

DCCC 919, 921 & 922/2008
(Consolidated)

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 919, 921 & 922 of 2008 (Consolidated)

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Reasons for Sentence

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1^st Charge

1.D1 pleads guilty to the disclosure of insider information as follows:

Statement of Offence

Insider dealing, contrary to section 291(3) and (8) of the Securities and Futures Ordinance, Cap. 571.

Particulars of Offence

LAM Kar-fai, Allen, during the period between 30^th day of June 2005 and 13^th day of September 2005, in Hong Kong, being connected with a listed corporation namely, Media Partners International Holdings Inc., and knowing that certain information was relevant information in relation to that corporation, namely information in relation to the proposed acquisition of a controlling percentage of the issued shares of MPI by JCDecaux Pearl & Dean Limited at a substantial premium to the prevailing market price of those shares, disclosed the information, directly or indirectly, to another person, namely FONG Yen-hwung, Ryan (“Fong”) knowing or having reasonable cause to believe that Fong would make use of the information for the purpose of dealing in the listed securities of MPI.

4^th Charge

2.D2 pleads guilty to the making use of insider information for dealing as follows:

Statement of Offence

Insider dealing, contrary to section 291(5) (a) and (8) of the Securities and Futures Ordinance, Cap. 571.

Particulars of Offence

FONG Yen-hwung, Ryan, during the period between 20^th day of July 2005 and 22^nd day of September 2005, in Hong Kong, having information in relation to a listed corporation, namely Media Partners International Holdings Inc., which he knew was relevant information, namely the proposed acquisition of a controlling percentage of the issued shares of MPI by JCDecaux Pearl & Dean Limited at a substantial premium to the prevailing market price of those shares and which he received, directly or indirectly, from a person namely, LAM Kar-fai, Allen, whom he knew was connected with that corporation and whom he knew or had reasonable cause to believe held the information as a result of being so connected, dealt in the listed securities of MPI.

The facts

3.D2 joined HSZ Hong Kong (“HSZ”) in August 2004.  Initially he was employed to work on stock deal execution but over time he was given some discretion as to trading.  By July 2005, he was a Portfolio Manager whose duties included trading in shares on behalf of Asia Opportunities Fund (“AOF”), an investment fund managed by HSZ.

On 4^th July 2005, he himself was allotted 5,000 shares in AOF at a cost of US$100 per share.  He also dealt in shares on his own account through Citigroup and China Everbright Securities (“CES”).

4.In June 2005 and thereafter, D1 was employed by CLSA Equity Capital Markets Ltd (“CLSA”) as a director.  Between June and September 2005, CLSA was engaged as financial advisor to JCDecaux (“JCD”) in the matter of a proposed acquisition of the majority shareholding in Media Partners International Holdings, Inc (“MPI”), a company listed on the GEM board of the HK Stock Exchange.

5.At all material times, the proposed acquisition and its details were confidential to the parties and their professional advisors, including CLSA.  Information concerning the proposed acquisition and its status was not public.

6.On 30^th June 2005, AOF was launched.  On 4^th July 2005, D2 invited D1 to invest.  As a result, D1’s wife made an investment in AOF.

7.During July, August and September 2005, having overheard conversations in the CLSA office which included relevant information about MPI and the MPI acquisition, D1 disclosed such relevant information to Ds including in 3 emails dated 2^nd, 17^th August, and 5^th September 2005.

8.Between July and September, with such relevant information in hand and knowing that D1 was a director of CLSA, D2 purchased a total of 2,426,000 MPI shares for his own account and a total of 8,200,000 MPI shares for AOF.

9.On 21^st September 2005, after the announcement of the full conclusion of the acquisition at a price at a substantial premium to that at which D2 had purchased the MPI shares, D2 sold all those shares at a profit of HK$1,026,459 for himself and of HK$3,389,795 for AOF.

10.D2 resigned from HSZ on 13^th March 2006.  On 3^rd April 2006, he redeemed his investment in AOF at a profit.  He had held 10.2% of AOF.  The profit attributable to his investment in MPI shares through AOF was HK$345,759. 

11.It is accepted that in the said emails between D1 and D2, they had put up the camouflage of discussion about the potential purchase of a French car when they were actually referring to the MPI acquisition. 

Mitigation put forward for D1

12.D1 has a clear record.  He is now 38 years of age, married and has 2 daughters aged 4 years and 10 months respectively.  He graduated from the Pennsylvania University in 1993 with degrees in B.A. and B. Sc.  He then qualified as a Certified Public Accountant in New York.  He worked in Deloitte as an auditor from 1993 to 1995.  He worked in Pepsi from 1995 to 1997.  In 1997, he returned to Hong Kong, where his parents were, to work in the Bank of America.  In August 2001, he joined CLSA.  In 2006, he was promoted to Associate Director of Investment Banking.  In June 2006, he worked in Infosys, subsequently as the vice president responsible for the Asia Pacific region.  His performance was outstanding. 

13.It is submitted in mitigation that the MPI deal was first broached by D2 in their chat.  Afterwards he happened to overhear his colleagues’ conversations and obtained the relevant information.  Conversations could be overheard as the CLSA investment banking office where he worked was a small place.  Different sectors shared the facilities including fax machine, photocopier, and the Bloomberg machine for stock quotation.  Colleagues worked in cubicles.  There were about 8 people involved in the MPI acquisition. 

14.The present offence and publicity would definitely ruin his professional reputation.  He has produced a number of mitigating letters.  They suggest that he is a competent, responsible, and well-liked person. 

15.D1 did not obtain the relevant information in his professional capacity.  He had no personal profit from the disclosure.  His wife’s profit was only HK$69,000.  It is submitted that since he had no control of the decision whether to purchase AOF or not by HSZ, the profit AOF made, in the sum of HK$3,389,795, should be ignored in the sentencing.   

16.It is submitted that at the time he committed the present offence in 2005, criminal prosecutions had been rare.  I am asked to consider community service.   

17.It is also submitted that if imprisonment has to be imposed, it ought to be suspended.  The exceptional circumstances lie in the fact that:

(1)  He only overheard the relevant information.

(2)  The profit made by his wife was small.

(3)  His professional reputation would be adversely affected by the present conviction. 

Mitigation put forward for D2

18.He is 36 years of age and married.  He has a clear record.  His mother passed away 10 years ago.  He maintains good relationship with his father.  He attended school in Hong Kong up to F.3, and continued his studies in the United States until he graduated from Brown University with B.A. in International Relations and B.A. in Organizational Behaviour Management (Analytical Methods) in 1995.  After obtaining a licence from SFC in 1996 for financial advice and asset management, he began to work in various investment companies including in turn Chemical Securities Asia Limited, Goldman Sachs (Asia) LLC, Morgan Stanley Dean Witter Asia Limited, SBI E2-Capital Securities Limited, Kingston Asset Management Limited, and then HSZ, which related to the present offence.  After leaving HSZ in 2006, he worked in Keywise Capital Management (HK) Limited (“Keywise”) and assisted in setting up its hedge fund.  His application for approval as a responsible officer of Keywise was not processed by SFC in the light of the present proceedings.  As a result, his employment with Keywise was terminated.  He is presently assisting family friends to invest.  Such activities do not require any licence from SFC. 

19.He did not get any direct benefit from the profit to AOF.  HSZ might give him discretionary year-end bonus if he managed the funds well, though. 

20.The present offence and publicity would definitely ruin his professional career.  He has produced a number of mitigating letters.  They suggest that he is a competent, responsible, and well-liked person.  He has set up a scholarship fund in the name of his deceased mother to help underprivileged students, apart from his contribution to various charities and scholarships.  He has already put up no less than US$110,000. 

21.It is submitted that at the time he committed the present offence in 2005, criminal prosecutions were rare.  I am asked to consider community service. 

22.It is also submitted that if imprisonment has to be imposed, it ought to be suspended.  The exceptional circumstances lie in the fact that:

(1)   He has pleaded guilty.

(2)   He now offers to pay back the whole sum of profit.

(3)   He held no duty of trust vis-a-vis CLSA.  He only received the relevant information from D1.  He did not pass it on to anyone else.  There was no sophistication or planning although camouflage in the emails was adopted.  The deals were made within only 2 months.  The takeover was not affected by his activities.  The impact on public confidence and integrity of the market was at the bottom end of the spectrum.   

Sentencing principles

General principles

23.In Hong Kong, the Securities and Futures Ordinance, Cap. 571, came into effect on 1^st April 2003.  Although there were only few prosecutions in the criminal courts, the offences prescribed therein ought not to be taken as paper tigers.  In Koon Wing Yee v Insiderr Dealing Tribunal [2008] 3 HKLRD 372, Sir Anthony Mason NPJ observed at 391 that:

45.              Insiderr dealing is an “insidious mischief” which threatens the integrity of financial markets and public and investor confidence in the markets.  The object of SIDO was to eliminate insiderr dealing and to reinforce the transparency of the markets, thereby enhancing and preserving Hong Kong’s position as an international financial centre…

46.              That insiderr dealing amounts to very serious misconduct admits of no doubt.  It is a species of dishonest misconduct… 

47.              Moreover, insiderr dealing is a form of conduct which can be readily characterized as criminal conduct.  Indeed, the SFO, which enacted the present legislation governing insiderr dealing, provides for dual civil and criminal regimes to deal with six types of market misconduct.  The purpose of the SFO was to enhance the deterrent and punitive effect of the available sanctions for insiderr dealing on the basis that the regime under SIDO was insufficient to combat effectively acts of market misconduct.  Similar dual regimes had by then been adopted in the United Kingdom, the United States and Australia.   

24.Although the body of case law in other jurisdictions such as U.K. has developed over a period of around 20 years, cases identifying the sentencing principles are a rare find.  So far the most important one must be the recent English Court of Appeal case of R v McQuoid [2009] EWCA Crim 1301 dated 10^th June 2009.  The appellant was a solicitor and former general counsel of TTP Communications Plc (“TTP”).  In the course of employment he once came to know of insider information about a proposed takeover by Motorola Plc (“Motorola”).  He disclosed it to his father-in-law, who then bought TTP’s shares.  After the takeover was made public to the market, TTP’s share price rose 2 folds.  He was given about ₤25,000, half of the profit.  The Court of Appeal regarded 12 months’ imprisonment as the acceptable starting point but reduced it to 8 months after hearing of mitigation based on his personal circumstances.

25.The Court of Appeal outlined various considerations relevant to sentencing insider offences as follows:

(1)    the nature of the defendant’s employment or retainer, or involvement in the arrangements which enabled him to participate in the insiderr dealing of which he is guilty;

(2)    the circumstances in which he came into possession of confidential information and the use he made of it;

(3)    whether he behaved recklessly or acted deliberately, and almost inevitably, dishonestly;

(4)    the level of planning and sophistication involved in his activity, as well as the period of trading and the number of individual deals;

(5)    whether he acted alone or with others and, if so, his relative culpability;

(6)    the amount of anticipated or intended financial benefit or (as sometimes happens) loss avoided, as well as the actual benefit (or loss avoided);

(7)    although the absence of any identified victim is not normally a matter giving rise to mitigation, the impact (if any), where proved, on any individual victim; and

(8)    the impact of the offence on overall public confidence in the integrity of the market; because of its impact on public confidence it is likely that an offence committed jointly by more than one person trusted with confidential information will be more damaging to public confidence than an offence committed in isolation by one person acting on his own; 

Age and a guilty plea will always be relevant.  So, too will good character.  However, it must be borne in mind that it will often be the case that it is the individual of good character who has been trusted with information just because he or she is any individual of good character.  By misusing the information, the trust reposed as a result of the good character has been breached. 

Examples of sentencing insider dealing offenders

In Australia

26.In R v Doff [2005] NSWSC 50 dated 11^th February 2005, the appellant was a real estate agent.  The intending purchaser of a house was Mr. McGowan, who was Chief Executive Officer of Impulse Airlines (“Impulse”), a domestic airline.  Impulse was in a financial plight.  Qantas offered to inject capital into Impulse, subject to the approval by the Australian Competition and Consumer Commission (“Commission”).  If approval were not forthcoming, Mr. McGowan would like to withdraw from the intended purchase of the house.  He wanted a clause to that effect in the sale and purchase agreement.  In the presence of the appellant, he explained the reason to the vendor, Mr. Rivkin (who soon became the offender in R v Rivkin 198 ALR 400 hereinafter) in confidence why he wanted such a clause.  The appellant soon managed to purchase a quantity of Qantas’s shares.  The Commission approved the takeover.  The appellant sold his shares in Qantas and made a profit of AUS$11,800.

27.The Court took into account his automatic disqualification from managing a corporation under the Corporations Act by the conviction and the possibility of having his real estate licence revoked.  He was ordered to do 350 hours of community service and pay a fine of AUS$30,000.  The statutory maximum was 5 years’ imprisonment and a fine of AUS$200,000.   

28.In R v Rivkin 198 ALR 400, a jury convicted the aforesaid Mr. Rivkin of insider dealing for making use of Mr. McGowan’s relevant information to deal in Qantas’s shares.  It was found as a fact that Mr. McGowan had specifically warned him not to use it.  He made a profit of AUS$2,664.94.  He had been a successful stockbroker for 30 years and a principal in a number of his own stockbroking firms.  He held a number of important positions both within the Sydney Stock Exchange and the Australian Exchange Ltd.  His references were numerous and prominent.  The Supreme Court regarded his being a most experienced stockbroker and dealer on the stock market had imported a serious content into the circumstances of the offence.  He was sentenced to periodic detention for a term of 9 months and fined AUS$30,000.        

In Canada  

29.In R v Harper (2002) Can LII 49638 (ON S.C.), the appellant was the president and shareholder of a company which owned a gold mine in Ghana.  He came by two successive secret test results which tested negative for gold.  He sold his shares to avoid loss.  He was sentenced to 6 months’ imprisonment and fined CAN$1,000,000 on each count.  There was no mention of the loss avoided in the judgment but it ought to be a huge sum as reflected in the sizeable fine.  The statutory maximum was 5 years’ imprisonment and a fine of CAN$5,000,000. 

30.In R v Landen 2008 ONCJ 561, the defendant was the vice president and shareholder of a Canadian gold mining enterprise.  Prior to the public release of a dim forecast of his enterprise, he had made a profit of CAN$115,176 by trading in his own shares.  He was sentenced to 45 days’ imprisonment and fined CAN$200,000. 

In U.K.

31.In R v Titheridge (1983) 4 Co Law 117, the female defendant was a personal secretary to a director of a merchant bank.  The merchant bank was involved in a takeover.  Although code names were used to reduce the risk of leakage of information, she was in a position to know what the real parties were.  She disclosed such information to her husband, who worked in another leading merchant bank.  He bought the relevant shares and made a profit for himself and the fund he managed.  He made a profit of ₤6,000.  She resigned from her job whereas his job was in question. 

They pleaded guilty and were each fined ₤4,000. 

32.In R v Butt [2006] EWCA Crim 137, the applicant worked for an investment bank, as a vice president.  His specific job was in the hub of the secure zone of the bank known as the Compliance Control Room.  This existed to ensure the secrecy of dealings.  His position gave him privileged access to highly confidential insider information that was price-sensitive about the status and performance of companies which the bank was advising.  His responsibilities included supervision of 8 employees who would receive price-sensitive information about shares.  He had the say to determine when transactions would be made public.  Over a period of 3 years, he used such secret insider information to facilitate his speculation of shares.  A total of 19 transactions were conducted through the accounts of the co-accused.  He took ₤287,807, which was 80% of the winnings.  He was convicted of conspiracy to commit insider dealing.  The statutory maximum was 7 years and he was sentenced to 5 years’ imprisonment.  A confiscation order was made to disgorge his profit. 

33.The Court of Appeal accepted that the applicant was the originator and lynchpin of such a flagrant, calculated and deliberate breach of trust which lasted over a long period of time.  The guidelines of R v Clark [1998] 2 Cr App R 137 would point to imprisonment of 5 – 9 years.  The Court of Appeal expressly recognized the distinction between that case and insider dealing.  Clark was relevant but not to be equated.  Upon comparison with recent cases of related but not identical offences, the original sentence of 5 years was reduced to 4 years on appeal.  The statutory maximum in U.K. was 7 years’ imprisonment.           

In Hong Kong

34.In HKSAR v Hung Lai Mei ESS 17642-5/2008, the defendant dealt in the shares of her company.  It was to avoid loss in the value of her shares in the light of her non-public knowledge of a bankruptcy protection being filed in the United States by a customer cum debtor of her company’s subsidiary company.  She was sentenced to 6 months’ imprisonment suspended for two years.  She was also fined HK$200,000 in total. 

35.In HKSAR v Lam King Hung & Anor. ESS 34341-2/2008, the 1^st defendant was a qualified accountant employed as accounting manager of a listed company,.  He disclosed information of the restructuring of two main companies in the group to his wife, who was also a qualified accountant employed as finance manager in a company unrelated to the case.  He was convicted of making use of such information to deal (ESS 34341/2008) and procuring his wife to deal (ESS 34342/2008) in the shares of one of the restructuring companies.  He made a profit of HK$325,740.  He was sentenced to concurrent terms of 8 months’ imprisonment.  In addition he was fined HK$80,000 on the first summons and HK$50,000 on the second summons.      

36.In HKSAR v Ma Hon-yeung DCCC 229-240/2008, the 1^st defendant was vice president of an investment bank.  He was a member of the team working on the privatization of a jewelry company.  He procured and counseled the 2^nd defendant to make use of price-sensitive information of the deal by way of operating a joint trading account in the 2^nd defendant’s name.  They made a joint profit of HK$440,000.  The 1^st defendant also told the 3^rd defendant (his brother) such information.  He made a profit of HK$327,000.  He told the 4^th and the 5^th defendants in turn such information.  The 4^th defendant made a profit of HK$105,000.  The 5^th defendant made a profit of HK$16,000. 

37.Chief District Judge Li adopted a starting point of 2 ½ years’ imprisonment in the 1^st defendant’s case and ordered disciplinary action against him by the relevant professional body.  He was also fined HK$230,000, representing his share of the profit.   The starting point for the 2^nd defendant was 12 months’ imprisonment.  She was also fined HK$210,000, representing her share of the profit.   Each of the 3^rd, the 4^th, and the 5^th defendants were ordered to perform community service and fined to about the same extent of their profits.         

Suspended sentence

38.In SJ v Li Cheuk Ming [1999] 1 HKLRD 63, the respondent offered $500 to bribe an inspector of China Light & Power for approval of his works rendered in the installation of the electrical system for a construction company.  The magistrate ordered him to perform community service.  In applying for a review of the sentence, the prosecution pointed out that the magistrate had not specified the exceptional circumstances in this case.  The Court of Appeal agreed that his guilty plea, general family background and financial losses do not constitute exceptional circumstances.  Patrick Chan CJHC (as he then was) discussed the approach to “exceptional circumstances” in suspending a term of imprisonment as follows:

The Magistrate, in view of the exceptional circumstances in the case, did not sentence the respondent to immediate imprisonment. We opine that exceptional circumstances are mainly judged on the basis of degree and common understanding. Generally speaking, exceptional circumstances can be categorized into personal exceptional circumstances, exceptional circumstances relating to the nature of the offence, and exceptional circumstances relating to consequences. The definition of exceptional circumstances varies from case to case. The circumstances are usually very extreme or it could attract an immediate outpouring of public sympathy.

A sentence of 3 months’ imprisonment was ordered to substitute the community service.

39.In R v Arnold Weston [1996] 1 Cr.App.R. (S) 297, the appellant was 60 years of age with a clear record.  He was convicted of indecent assault on a 13-year-old girl in her own home to which he gained access as a friend of her family.  His sentence of 9 months’ imprisonment was suspended on appeal (which was permissible for such offence in U.K.).   Russell LJ in the English Court of Appeal adopted Wright J’s observations in R v Lowery (1993) 14 Cr. App. R. (S.) 485, 489 as follows:

No doubt, as counsel has submitted to us, the expression “the exceptional circumstances of the case” is of sufficiently wide construction so as to allow the Court to take into account all the relevant circumstances surrounding the offence, the offender and the background circumstances.

The appellant’s sentence was to be suspended for 1 year in view of his and his wife’s pitiable state of health. 

Community service

40.Even where a defendant’s personal circumstances can satisfy all the requirements for community service, it does not mean that the case must justify such a sentence.  In HKSAR v Wong Yiu Kuen [2002] 1 HKLRD 712, the appellant was the sole proprietor of a successful enterprise which undertook decorating work for Mandarin Oriental Hotel over a considerable period of time.  He pleaded guilty to conspiracy to defraud. Mayo VP observed that:

Even where the offender is an appropriate candidate for a community service order, one should only be imposed where there is no established sentencing principle that the offender's crime requires a more severe punishment to be imposed on him.

41.Wong Yiu Kuen was applied in HKSAR v Hsueh Cheng-kang Peter HCMA 135/2004.  The appellant there was a senior officer in SFC.  He was sentenced to short terms of imprisonment for 2 charges arising out of a scheme to deceive housing allowance on the pretense that he was paying rent for a flat which was actually held by nominees on trust for him and his wife.  He reaped a benefit of $48,000.  At the time of the sentence, he was 70 years of age.  He had a clear record.  Gall J affirmed the need for imprisonment in that case at para. 5 on the ground that:

… there has been established a sentencing principle in this type of cases … to a point where a community service order is normally precluded.

Mitigation based on fall from grace

42.In AG v Chan Chi-yin & Anor. [1988] HKC 44, the appellants were convicted of trafficking in a huge quantity of heroin.  Counsel attempted to put forward their good backgrounds for additional discount in sentence.  The Court of Appeal rejected this attempt.  Kempster JA said that:

5.         …  The culpability of a person coming from a good background may, indeed, be regarded as the greater particularly if he is a person to whom others may look for an example. As against this we appreciate and take into account the self-induced punishment inflicted on both respondents; as to one by the loss of a promising sporting career and to the other by the loss of what was becoming a solid business.

43.In Wong Yiu Kuen (above), the defence put forward in mitigation the applicant’s good character and the devastating impact of a substantial prison sentence upon the applicant and his family.  Kempster JA observed that:

19.       So far as the applicant's good character is concerned it is almost always the case with this type of offence that the perpetrator will have hitherto been of good character and that the personal consequences of the conviction will be disastrous.

44.Defendants who hold high office or professional responsibilities are sometimes given a slight discount.  The loss of pension or impending disciplinary proceedings is sometimes recognized as additional hardship that the defendants will suffer.  In Chan Kin-kwok & Anor. HCMA 235/2007, the appellant was a serving police officer with an unblemished record in the police force.  He was convicted of professing to be a member of a triad society.  He would definitely lose a 21-year pension as a result.  He was allowed 1 month’s discount from the starting point of 9 months’ imprisonment. 

45.In R v Thomas David Richards (1980) 2 Cr App R (S) 119, the appellant was a general medical practitioner.  He was convicted of obtaining money in the total sum of ₤222 from the Health Authority by submitting false claims for payment in respect of professional work he rendered.  At the time of sentence, he was aged 57.  He had started his medical practice 20 years ago.  In reducing his sentence from 30 months to 12 months on appeal, Lane CJ said at 121:

…  One must bear in mind that for a person such as this, a prison sentence, be it a week or be it 30 months, is disaster.  It is the end of his whole career.  It is the end of his life as a doctor.  The disgrace will remain with him for ever more.  That must be borne in mind.

Secondly, one must not lose sight of the disciplinary proceedings which are inevitable which in themselves mean a very large financial penalty, albeit indirectly; likewise the loss or probable loss of his pension rights. 

Sentencing D1 and D2

46.As observed in Koon Wing Yee (above), D1’s and D2’s misconduct was serious and dishonest.  It threatened the integrity of financial markets and public and investor confidence in the markets.  Each offence carries a maximum imprisonment of 10 years and a fine of HK$10,000,000 on indictment.  The maximum imprisonment is the highest among its counterparts in Australia, Canada, and U.K. 

47.There are no authorities in point and I do not accept the infrequency of criminal prosecution can give rise to any reasonable expectation of no prosecution or no imprisonment for each offence. 

48.D1 did not commit the offence in his professional capacity.  It must be noted, however, that but for his professional capacity, he would not be present in the office where he overheard his colleagues from July to September 2005.  He did not commit any breach of trust but indeed abused his position to be a colleague working in the same office.  He conveyed the relevant information in camouflage to D2 as seen in 3 emails from August to September 2005. 

49.I apply Mayo VP’s observations in Wong Yiu Kuen (above) to consider whether “there has been established a sentencing principle in this type of cases to a point where a community service order is normally precluded”.  The answer is in the affirmative. Imprisonment is the only appropriate option.  I take a starting point of 9 months’ imprisonment.  I reduce it by one-third because of his guilty plea and clear record.  I do not accept it as mitigation the fact that he may be branded disreputable professionally as a result of the conviction.  There are no other mitigating factors.  His sentence is 6 months.  He asks for a suspended sentence.  In my view, his purported exceptional circumstances relating to whether the circumstances of the case or his personal situation are not truly exceptional so that his sentence shall be suspended.  Hence his sentence is not to be suspended.   

50.As he had facilitated his wife’s investment in AOF to the extent of HK$69,000 in profit, I fine him HK$69,000 in disgorgement of such profit on top of imprisonment.

51.D2’s case presents more serious facts.  Although there was no breach of trust, he committed the offence in his professional capacity.  I order for disciplinary action to be taken against him by SFC pursuant to s. 303(2)(c) of SFO. 

52.Community service is normally precluded in this type of cases.  Imprisonment is the only appropriate option.  I take a starting point of 21 months.  I reduce it by one-third because of his plea of guilty.  Whilst his fall from grace on the professional level would be additional hardship, to a person as intelligent as he, it could hardly have been unforeseen at his saner moments.  I take 1 month off.  For all the charitable deeds in his dossier, I take 1 extra month off.  There are no other mitigating factors.  His sentence is 12 months.  He asks for a suspended sentence.  In my view, his purported exceptional circumstances relating to whether the circumstances of the case or his personal situation are not truly exceptional so that his sentence shall be suspended.    Hence his sentence is not to be suspended.   

53.As he had made a profit of HK$1,372,218 in total, comprising his own account and his holding in AOF respectively, I fine him HK$1,372,218 on top of imprisonment. 

54.The prosecution do not seek any costs order under s. 185(5) of SFO.  Such order not being mandatory, I will make no order.