Fu Kor Kuen Patrick and Another v. HKSAR
Read the full judgment text of FACC 4/2011 on BabelCite. This Court of Final Appeal judgment was delivered on 24 May 2012 before Bokhary PJ, Chan PJ, Ribeiro PJ, Litton NPJ, Gleeson NPJ.
Criminal law – false trading in securities – Securities and Futures Ordinance (Cap 571) s.295 – elements of offence – matched orders and circular trading – commission farming – defence under s.295(7) – whether defence available where case also independently falls within s.295(1) – statutory interpretation – whether s.295(7) imposes a persuasive or merely evidential burden on a defendant – constitutional presumption of innocence under art 87 Basic Law and art 11(1) Bill of Rights – proportionality – reverse onus – whether expert opinion on a defendant's purpose is admissible – whether trial judge's finding of a subsidiary purpose beyond commission farming was sound – appellants conducted matched circular trading of Macquarie derivative warrants on 20 days between January 2004 and January 2005 with total turnover well over HK$300 million, in order to harvest commission rebates offered by the issuer – trading generated a false appearance of active trading in the warrants – appellants did not testify at trial – trial judge (Deputy District Judge Sham) convicted on 20 counts of false trading contrary to s.295(1) and s.295(6) and sentenced D1 to 2 years 9 months' imprisonment and D2 to 3 years – Court of Appeal refused leave to appeal against conviction (holding that s.295(7) defence was unnecessary to consider) but reduced each sentence to 15 months – Whether the s.295(7) defence is engaged where the case also independently falls within s.295(1): held, yes – the opening words of s.295(5) ('without limiting the generality of subsection (1)') do not allow the prosecution to elect to disregard subss (5) and (7), and s.295(7) applies by its plain words once the conduct falls within s.295(5)(a), (b) or (c) – Whether the persuasive burden imposed by s.295(7) is constitutional: held, yes – the burden is rationally connected to the legitimate aim of maintaining an orderly securities market and is proportionate, distinguishing Lee To Nei v HKSAR and following R v Johnstone on the basis that the defence is purely subjective and concerns matters within the defendant's own knowledge – Whether expert evidence on a defendant's state of mind or purpose is admissible: held, no – experts in the securities market may give admissible evidence on market conditions and practices but may not opine on a defendant's subjective purpose (applying Dasreef Pty Ltd v Hawchar and Folkes v Chadd) – Whether the appellants established their s.295(7) defence: held, yes – the trial judge's finding that the appellants had an additional collateral purpose of creating a false appearance of liquidity to facilitate their exit was a surmise unsupported by evidence, and across all 20 operations the appellants exited the market at near-entry prices (mostly to the liquidity provider MEAL) without difficulty, on a 'commission-farming' hypothesis that was risk-free – convictions quashed on all 20 counts and sentences set aside – no order for new trial – costs to be dealt with on written submissions
Legal issues: Availability of s.295(7) defence where case also falls within s.295(1) independently of s.295(5) · Constitutionality of persuasive burden imposed by s.295(7) · Sufficiency of evidence to support s.295(7) defence of sole commission-farming purpose · Admissibility of expert opinion on the appellants' state of mind or purpose
Outcome: Appeal allowed; convictions on all 20 counts quashed; sentences set aside; no order for retrial
Cited by 17 cases · Cites 2 cases
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FACC No. 4 of 2011 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NO. 4 OF 2011 (CRIMINAL) (ON APPEAL FROM CACC NO. 179 OF 2010) ______________ Between:
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______________ J U D G M E N T ______________ Mr Justice Bokhary PJ : 1.I entirely agree with the judgment of Mr Justice Gleeson NPJ. All that I would add are a few words of my own on why the reverse-onus provision in question casts a persuasive rather than merely evidential burden on defendants. On its face, the burden which it casts is a persuasive one. Although they may not be common, there are situations in which it is compatible with an entrenched presumption of innocence to treat such a provision as legally doing precisely what it says. Then it is not to be struck down. Nor then is it to be read down to cast a merely evidential burden. Turning from the general to the particular, this reverse-onus provision goes to the purposes for which defendants acted as they did. Especially in circumstances like those at which this reverse-onus provision is aimed, defendants are singularly well-placed to prove what their purposes were. It would be all too easy for them merely to raise an issue as to their purposes. If that is all that this reverse-onus provision required them to do, there would be little or no point to it. The present situation isonein which it is rational to see a need for some reversal of the onus. Casting a persuasive burden on defendants is proportionate to that need. That burden is of course to be discharged on a mere preponderance of probability. Upon a fair-minded approach to what is required of defendants, they remain duly protected against wrongful conviction. This persuasive burden on defendants is therefore constitutional. 2.In thanking counsel on both sides, it is right to single out the worthy example set by the Director of Public Prosecutions, Mr Kevin Zervos SC, who, amidst all the other duties of his office, always makes time to come to court personally whenever his assistance is most needed. Mr Justice Chan PJ : 3.I agree with the judgment of Mr Justice Gleeson NPJ. Mr Justice Ribeiro PJ : 4.I agree with the judgment of Mr Justice Gleeson NPJ. Mr Justice Litton NPJ : 5.I have had the advantage of reading in draft Mr Justice Gleeson NPJ’s judgment and agree with it. “Matched trades” 6.There is no doubt that the present case is one of “matched trades” for derivative warrants made through a recognized market. The scale of the appellants’ operations was in total enormous. They were conducted on nineteen days, between 16 January 2004 and 7 January 2005. The total turnover, in relation to the twenty transactions as charged, came to well over $300 million. This brings the case squarely within the provisions of s 295(5)(b) and (c) of the Securities and Futures Ordinance, Cap 571. Hence the appellants must be regarded (i) as doing something with the intention of creating a false or misleading appearance of active trading in derivative warrants or (ii) at least were reckless as to whether their acts had or were likely to have such an effect. Absolutely Offences ? 7.If the statute had ended there, it would have created in effect an offence of absolute liability. “Matched orders” made in the stock exchange, in terms of s 295(5)(b) and (c), would have been prohibited irrespective of purpose. 8.But the sub-section that creates the offence – subsection (6) – is expressly “subject to subsection (7)”. Turning to subsection (7) one sees that the legislature has mitigated the harshness of the “deeming” provision in subsection (5) by giving a defendant the opportunity of showing that the purpose of making “matched orders” was not and did not include the creating of a false or misleading appearance of active trading. The purpose of such activity is peculiarly within the knowledge of the defendant. The onus of showing purpose therefore rests on the defendant. If established on a balance of probabilities, this would have provided a defence, even if the ingredients of an offence under subsection (1) were satisfied. Commission Farming 9.Here the defence case was that the appellants were quite openly taking advantage of a “market anomaly” – an anomaly created by Macquarie’s offer of commission-rebates, which had the effect of offsetting the transaction cost, enabling the appellants to make a small profit on each “trade”; their sole purpose was, as they claimed, just that : they were “commission farming”. 10.To achieve their purpose they had to make repeated trades between themselves. As the trades were in an open market there was always the possibility of an outside party taking up part of their “stock”, thus diminishing the commission-rebate payable. Hence the trades between themselves had to be rapid, and repeated frequently. This inevitably generated volume in the market. Stopping here, it would surely have appeared to an objective observer that their sole purpose was to make the small slice of commission-rebate on each trade. We know from the trial judge’s finding that when they first embarked on this operation, on 16 January 2004, their stock acquired from Macquaries was 2 million warrants (No. 9515) costing $486,000. They ended the day selling the stock back to Macquaries at virtually the same price and made a net gain of $55,784. Their next venture was ten days later, with a stock of 500,000 warrants (No. 9578), also sold back to Macquaries, yielding a net gain of $118,336. The trades on these days represented 76% and 59% of the market on those two warrants. What impact did that have on the market for those two warrants ? The judge’s finding is silent on the point. Was there another purpose ? 11.What we do know is that the prosecution’s expert Mr Clive Rigby, when he made his first report, said that the sole purpose of the appellants’ operations was commission-farming. Such expression of opinion was inadmissible evidence, as I shall endeavour to explain later on. Nevertheless, such expression of opinion was presumably based upon facts and assumptions concerning the market in derivative warrants known to Mr Rigby, drawing on his expert knowledge of market conditions. It did not seem to have occurred to Mr Rigby at that time that there was another purpose : To create an illusion of liquidity in the market, rendering it easier for the appellants to exit the market at the end of the trading day at a favourable price : This came as an afterthought to Mr Rigby, in this form :
12.Looking at the matter objectively, there was of course an appearance of active trading, and in one sense an illusion of liquidity, on the days the appellants performed their operation. It was the result of such operation – the inevitable result. It was not the purpose of the operation. 13.The matter can be examined in this way : The third time the appellants engaged in “commission – farming” was 4 February 2004. It was through warrant No. 9247. Assume that they had ended the day with a net loss on that warrant, because they were only able to “exit” the market at a price which effectively cancelled the gain they made on the commission-rebate : Would they have embarked on trading the next day, using a different warrant, simply for the purpose of generating an illusion of liquidity ? Surely not. If they traded the next day using a different warrant it would have been because they were reasonably confident of making a net gain at the end of the day. Which is precisely what they did. They traded warrant No. 9430 on 5 February and made a net gain of $112,619. 14.What is obvious is that, as they went along, conducting their operations on different warrants, they were gaining greater experience of the market in derivative warrants, exiting the market before it closed each day. All this suggests that, from a common sense point of view, the purpose of the appellants operations was “commission farming”. Nothing else. The trial judge’s approach 15.In approaching the statutory defence under subsection (7) the judge said this :
16.The judge said that the appellants were “clearly day trading” (§ 75) and “unless they were sure from the start …there was someone who would definitely buy back their warrants at the end of the day, they would be running the risk of not being able to exit the market”. The judge concluded that a purpose of the circular trading was to create an appearance of an active market, to ensure that the appellants would be able to exit the market, at a favourable price, at the end of the trading day : “They traded not only for earning the rebates, but also wanted to exit the market by creating the false appearance of active trading” (§ 75). 17.This line of reasoning is based upon a surmise : That they ran a “risk of not being able to exit the market” at the end of the trading day. It was not based upon any underpinning fact. What the appellants did have, as they continued to perform the same operation on different warrants from time to time, was experience; and the fact is that over the twenty operations they conducted between 16 January 2004 and 7 January 2005 they exited the market at virtually the same price as they entered it, trading between themselves at that price all day. There is not a scintilla of evidence to suggest they had difficulty in exiting the market. What risk ? 18.On the question of risk it is worth making this observation : The totality of the trades in this case in dollar terms is enormous, but the actual amounts of money the appellants risked on each occasion was relatively small. Take for instance Charge 5, the trades done on 10 February 2004. They started with 1 million warrants (No. 9246) worth a total of $208,000. They gained a net amount of $87,572 on the commission-rebate. They sold their stock that day to outside parties, not back to the liquidity provider, at a loss of $0.006 per warrant : That is to say, $6,000. So their overall profit on that day’s trade was $81,572. Assume the warrants became totally worthless at the end of the day, their total loss would have been $208,000 minus $87,572. Not a catastrophic sum. 19.At paras 80-83 of his Reasons for Verdict the judge said in effect that there were only two possibilities. One was that the appellants had “some kind of agreement or arrangement” with the “warrant issuer” to create a false appearance of active trading “for the purpose of attracting other investors to go into the market”. The other possibility was to create the same false appearance for their own purposes : “to make it easier for them to exit the market”. 20.The judge did not seem to think there was a third possibility : That through experience they learnt that there was no difficulty in exiting the market at all. That “commission-farming” was risk free. The judge’s finding, that the appellants had a subsidiary purpose in their operations, was in my judgment fundamentally flawed. Court of Appeal 21.This defect in the trial judge’s reasoning rendered his judgement erroneous in law. It would normally have been corrected by the Court of Appeal. But here the matter was never dealt with because that court said it was unnecessary to consider the s 295(7) defence. The Court of Appeal thought that as intention or recklessness had been established beyond reasonable doubt in terms of s 295(1)(a)[1], subs (7) was not engaged, notwithstanding the fact that the trades in question were matched orders falling squarely within subs (5)(b) and (c) which in terms brought in the statutory defence under subs (7). Mr Justice Gleeson NPJ has explained more fully why the Court of Appeal has erred in this regard. I associate myself respectfully with his reasoning. Outcome of this appeal 22.Plainly the appeal must be allowed. But what is the proper order to make ? 23.Normally, where a statute puts upon a defendant the burden of proving his intention or purpose for doing something, he would discharge that burden by stepping into the witness box. Here the appellants did not testify. Their only witnesses were experts, who could testify as to market conditions and the like, but could express, of course, no opinion as to the appellants’ state of mind. But, as I have said earlier (see § 11 above) Mr Rigby’s view, expressed in his first report, was that the appellants’ sole purpose was commission-farming, taking advantage of a market anomaly. This must have been based upon his knowledge of market conditions and practices. And this was the case as put to the appellants’ expert witnesses in cross-examination by prosecuting counsel. So there was some material to support the appellants’ case that their sole purpose was commission-farming. The inherent probabilities arising from the peripheral facts, as set out in paras 9-14 above bear this out. 24.If the case were sent back to the Court of First Instance for a retrial, it would most likely result in an acquittal, based upon the material we have seen. Moreover, such a course would be oppressive as the events go back over eight years. In the unusual circumstances of this case I too would quash the convictions and make the orders proposed by Mr Justice Gleeson NPJ. Expert Evidence 25.I would add here this postscript. It is important that expert witnesses adhere to their code of conduct. When they express an opinion they must state clearly the facts, matters and assumptions on which such opinion is based, thus enabling the court to see whether such expression of opinion is within their field of expertise. 26.Here we have seen only some extracts from the reports of the three experts, and small parts of their testimony. We have not seen, by any means, the full picture. Nevertheless their reports and testimony seem riddled with inadmissible evidence : For example : “my personal disbelief in the possibility of the circular trading being coincidental rather than prearranged”; “the rebates create this arbitrage opportunity so, in my view, the purpose was to exploit this arbitrage opportunity”, etc. The function of the experts was to put forward facts and matters concerning the derivative-warrant market, from which the court might draw an inference concerning the defendants’ subjective intention and purpose. Full stop. Here, the experts appear to have strayed well beyond their field of expertise : This might well have been the reason why the judge ultimately pushed aside the expert evidence and drew upon “common sense”. In §30 of his Reasons for Verdict he said this :
27.This in turn might well have led to the flaw in the judge’s reasoning, as I have attempted to show in paras 9-20 above. Mr Justice Gleeson NPJ : 28.This appeal raises issues concerning the offence of false trading in the securities market. 29.On 7 May 2010, following a trial in the District Court by Deputy District Judge Sham, the appellants (described in the Reasons for Verdict as D1 and D2) were convicted of 20 charges of false trading contrary to s 295(1) and s 295(6) of the Securities and Futures Ordinance, Cap 571 (“SFO”). D1 was sentenced to imprisonment for 2 years and 9 months. D2 was sentenced to imprisonment for 3 years. 30.The appellants sought leave to appeal to the Court of Appeal against their convictions. On 23 December 2010, the Court of Appeal refused leave to appeal against the convictions, but granted leave to appeal against the sentences, allowed the appeals, quashed the sentences, and in their place sentenced each appellant to imprisonment for 15 months. The appellants are presently on bail. They have served almost the whole of their sentences. 31.The appellants sought, and obtained, leave to appeal to this Court against their convictions. They contended both that the case gave rise to arguable points of law of great and general importance in regard to the elements of an offence of false trading, and that there had been substantial and grave injustice. The first contention was accepted, and leave to appeal was granted. The matter relied upon in support of the second contention is relevant to the disposition of the appeals in the event that a material error of law on the part of the Court of Appeal is demonstrated. The legislation creating the offence 32.Section 295 of the SFO provides:
33.Section 295 was enacted in 2002. It replaced s 135 of the Securities Ordinance, Cap 333, and s 62 of the Commodities Trading Ordinance, Cap 250. Those earlier provisions prohibited conduct described as intentionally creating or causing to be created, or doing anything with the intention of creating, a false or misleading appearance of active trading, in a market for securities, or commodities, respectively. The Report provided to the Committee considering the Bill said its provisions were based on s 998 of the Australian Corporations Law. (It is unnecessary to go into the history of the Australian Corporations legislation around this time. It is described in Forge v Australian Securities and Investments Commission[2].) There are similarities, but also material differences, between the Hong Kong and the Australian legislation. The Hong Kong legislation is also different from United Kingdom and United States legislation on the same topic. The problems addressed in all these jurisdictions are long-standing and widely recognized, but the application of the regulatory scheme requires attention to the language of the relevant statute. 34.Section 998 of the Australian legislation, which dealt with “false trading and market rigging transactions”, was recently considered by the High Court of Australia in Braysich v The Queen[3]. Subsection (1) made it an offence to create, or do anything that is intended or likely to create, a false or misleading appearance of active trading in a market or a false or misleading appearance with respect to the market for or the price of securities. In subs (5), it referred in paras (a), (b) and (c) to the matters referred to in subs (5) of the Hong Kong legislation, but it dealt with those topics differently. It said that a person who engages in conduct of the kind described in those paragraphs “shall be deemed to have created a false or misleading appearance of active trading”. It fastened upon one of a number of different kinds of conduct that could give rise to a contravention of (1), that is to say, creating a certain appearance, and deemed the objective fact to exist, without addressing any mental element. It went on, in subs (6), to provide a defence if it were proved that the purpose or purposes of the conduct was not, or did not include, creating a false or misleading appearance of active trading. 35.The primary offence in the Hong Kong legislation is expressed somewhat differently. It is doing anything with the intention that, or being reckless as to whether it has, or is likely to have, the effect of creating a false or misleading appearance of active trading or with respect to the market for or price of securities. It is the state of mind (intention or recklessness as to the creation of a certain appearance) with which anything is done that gives rise to the contravention. 36.The legislation goes on to deal specifically, without limiting the generality of its primary provisions, with particular kinds of transaction, sometimes described as wash sales and matched orders. The treatment of these transactions involves two steps. The first step is to provide that, for the purposes of subs (1), a person who engages in the conduct described in (5)(a), (b) or (c) is to be regarded as doing something (scil. “anything”) with the intention that, or being reckless as to whether, it has the effect of creating the proscribed appearance. Subsection (1) establishes the contravention. Subsection (6) provides that, subject to subs (7), it is an offence to contravene subs (1). The second step is to create a defence. 37.The defence, provided by subs (7), applies where the defendant is charged in respect of a contravention of (1) taking place through the commission of an act referred to in (5)(a), (b) or (c). It is not expressed to depend upon whether the prosecution relies, or needs to rely, upon (5). The provision says that if the alleged contravention takes place through the commission of an act referred to in (5)(a), (b) or (c) then the defence is available. It will be necessary to return to the question of the application of the defence in a case where, independently of (5), the evidence is capable of establishing a contravention of (1), but the objective conduct of the defendant is conduct of the kind described in (5). 38.The language of s 295(7) indicates that the legislative intention was to impose on a defendant a persuasive burden of proof, to be discharged on the balance of probabilities. There is a question whether, in the light of the principles considered in cases such as HKSAR v Lam Kwong Wai[4], HKSAR v Ng Po On[5] and Lee To Nei v HKSAR[6], subss (5) and (7) are to be read down in such a way that the burden of proof on a defendant is evidential only, and that the ultimate legal burden of negativing the defence rests with the prosecution. The primary judge acted on that basis. The Court of Appeal did not find it necessary to decide the point. 39.These questions arise because the facts of the case have the following features. First, the conduct of the appellants plainly fell within s 295(5)(b) and (c). Secondly, their conduct created a false appearance of active trading in securities, and the appellants were at least reckless as to that. Thirdly, it was clear from the evidence that they acted with a commercial purpose (rebate or commission farming) that at the time was not otherwise unlawful and was not the purpose proscribed by subs (7). Whether they also had, as an additional purpose, the proscribed purpose is an issue. The conduct of the appellants 40.The facts concerning the objective conduct of the appellants were not in dispute, and were established by a Statement of Admitted Facts and documents tendered at the trial. 41.The subject of the charges was trading, on the Hong Kong Stock Exchange, between January 2004 and January 2005, in derivative warrants issued by Macquarie Bank Limited (“Macquarie”). Such warrants are instruments which give investors the right, but not the obligation, to buy or sell an underlying asset at a pre-set price on or before a specified date. Under the market rules, the issuer of such warrants was required to appoint a liquidity provider whose role was to respond to requests for quotes for the warrants. At the time, it was left to competitive forces to determine the precise level of liquidity provision that an issuer or provider would arrange. As was common, Macquarie appointed as liquidity provider a related company, Macquarie Equities (Asia) Limited (“MEAL”). 42.The appellants were day traders. Both had securities accounts with two firms of brokers, Grand Investment (Securities) Ltd (“Grand”) and Shun Loong Securities Company Ltd (“Shun Loong”). The brokers offered the appellants, by reason of the volume of their trading, discounted commission rates. (Before 2003, there had been a lower limit of 0.25% on the consideration of a trade but that limit was removed). The effective commission rate being paid by the appellants to the brokers was 0.04%. Issuers of derivative warrants operated “commission rebate schemes”. At the time, these were permissible under the Stock Exchange rules. (The rules were later changed). These schemes operated openly, and were advertised in newspapers. Macquarie had such a scheme. Typically, an issuer would pay an investor, through a broker, a commission rebate of between 0.1% and 0.25% of the consideration for a trade. In the result, as the Court of Appeal put it, since the total amount of rebates paid to the appellants was greater than the transaction costs they incurred, they were able to generate profits simply by buying and selling warrants to one another. Their trading activities made a modest profit on each trade, but were conducted with such vigour that, in the course of 20 days spread over a year, they made about $1 million. 43.Commission rebate schemes were banned in September 2006. The objection to them was that they had the potential to attract investors seeking to generate commission rebates rather than use derivative warrants as a form of investment. Such activity was considered to lead to an artificially created appearance of market activity. From one point of view, the activity was real; in fact it was hyperactivity. From another point of view, however, it resulted in turnover that did not reflect what was described by Mason J in North v Marra Developments Ltd[7] as “genuine supply and demand”. 44.On 20 days over the period the subject of the charges, in respect of derivative warrants issued by Macquarie, in each case for one day, the appellants bought and sold the warrants back and forth to one another, usually at the same price, and then, at the end of the day, they “exited” the market by selling the warrants, sometimes for a little more than they paid, sometimes for a little less, and sometimes for the same price. On 11 occasions the exit sale was to MEAL. On five occasions it was to a third party. On four occasions it was partly to MEAL and partly to third parties. On each of the 20 days of their trading, the appellants’ turnover constituted the bulk of the total market turnover in the relevant warrants. For example, on the first day, 16 January 2004, they did 74 trades, at a total consideration of $20,508,800, their turnover being 83,600,000, which was 76% of the total market turnover of 110,410,000. They incurred brokerage commission costs of $26,251, but earned commission rebates of $82,035. Whatever may have been Macquarie’s purpose in setting up its commission rebate scheme in the form it took, it provided the appellants with an opportunity to make a profit, and they took advantage of the opportunity. There was no room for doubt about what was at least their primary purpose. It was to earn the commission rebates that were on offer. Expert evidence 45.The facts set out above were admitted or proved by undisputed evidence. The appellants did not give evidence. The only other evidence in the case was expert evidence which in some respects took a questionable form, and which suffered an unusual fate. 46.The prosecution relied on the evidence of Mr Rigby, in written reports supplemented by oral evidence. Mr Rigby’s evidence was objected to, on grounds that included a challenge to his expertise. He had over 40 years experience, local and international, in the securities industry. His evidence included information about the nature of the securities market, and practices in the industry. The trial judge accepted that he was qualified to give expert evidence “on the subject before the court”. 47.The appellants called evidence from similarly qualified experts in the securities market: Mr White was called on behalf of D1; Dr Vinaimont was called on behalf of D2. 48.Each of those three witnesses was qualified to provide the court with relevant information about market conditions and practices. Each would have been qualified to express opinions on relevant matters within his expertise, provided such opinions were in proper form. That would have required stating (so that they could be tested against the facts admitted or established by the evidence) the assumptions upon which any opinion was based. It would also be necessary to show that the expressed opinion was upon a matter legitimately the subject of opinion, and within the expertise of the witness. A recent examination and explanation of the formal and substantive requirements for the admissibility of the opinions of experts, as well as a commentary upon the danger associated with disregard of those requirements, is to be found in Dasreef Pty Ltd v Hawchar[8]. 49.None of the witnesses possessed expertise of a kind that qualified him to express, for the information of the court, an opinion about somebody’s state of mind. The relevant statutory provision refers to three states of mind: intention, recklessness and purpose. In the context, all are subjective. The learned judge was required to form a judgment about each of them. Any intelligent observer, lawyer or lay person, might rationally form an opinion on the topic, but such an opinion would not be wholly or substantially based on specialised knowledge which in turn is based on that person’s training, study or experience. 50.The three expert witnesses were, by reason of their experience in the securities industry, in a position to provide the court with information about the market that could assist the judge to find facts relevant to a judgment about the state of mind of the appellants. They may have believed, with justification, that their experience of the market gave them insight into the possible motivations of traders that would not be available to an outsider. In that case, the information they could usefully and legitimately impart would be information about the market, not an opinion about the state of mind of a particular person acting on a particular occasion. A sound basis for an inference as to the purpose or purposes of the appellants was an accurate appreciation of where their commercial interests lay. Experts in the securities market were in a position to provide evidence that would assist such an appreciation. 51.The propensity of some expert witnesses to express opinions not wholly or substantially based on their specialised knowledge, but based upon inferences of fact outside their field of particular training or experience is well understood.[9] The danger for the proper process of fact-finding at civil or criminal trials is obvious. When, in 1782, Lord Mansfield said that “the opinion of scientific men upon proven facts may be given by men of science, within their own science”[10], he made an important point about both form and substance. An opinion, resting upon transparent factual assumptions, based upon a branch of knowledge in which the witness is an expert, may be of legitimate assistance to a finder of fact. It is when a witness goes beyond those bounds and expresses a judgment on a matter outside his area of specialised knowledge that the danger arises. 52.It must have been apparent that a potentially important – perhaps decisive – issue in the case would be that concerning the purpose or purposes with which the appellants committed acts of the kind referred to in paras (b) and (c) of s 295(5). This raised a question of fact to be decided by the trial judge. (The matter of onus may be left to one side for the moment). There are some cases in which the state of mind of a person may properly be the subject of expert opinion. In such cases, the relevant field of expertise might be psychiatry, or some other branch of behavioral science. Ordinarily, however, it is otherwise. An expert in firearms may be able to give useful evidence in a case of homicide, but such evidence would not include an opinion as to whether the accused discharged a weapon with intent to kill. The legitimate evidence of the expert may be of relevance to the judgment of a judge or jury about the issue of intention, but any opinion of the expert on that point would almost certainly be based at least in part upon inferences of fact and matters of judgment outside his or her field of expertise. Similarly, an expert in the securities market may be able to give evidence which is relevant to a decision about the intention, or purpose, with which a trader acts. Such evidence may disclose information about conditions or forces in a market that would not otherwise be apparent to a tribunal of fact. It may throw light on possible influences or consequences of conduct. It may provide circumstantial material that is useful, perhaps necessary, for a judgment about the state of mind with which a trader acted. However, the witnesses in the present case went further than that. They gave their opinions about the purpose or purposes with which the appellants acted. 53.Mr Rigby, the prosecution’s expert witness, in his initial written report, said that he saw no rational reason for the repetitive buying and selling at the same price engaged in by the appellants other than the “earning” or “farming” of commission rebates. This evidence was potentially exculpatory. However, the prosecution invited Mr Rigby to reconsider, asking whether he regarded the “farming” as the sole reason for the trading. He gave a further opinion that “in addition to the ‘farming’ of rebates another purpose of [the appellants’] circular trading was the creation of an appearance of liquidity likely to encourage bidding when [the appellants] needed to sell their position before the end of a trading day”. 54.Mr Rigby’s statement of opinion that there was an additional purpose of the circular trading was inadmissible. However, his evidence also contained information that was relevant to the decision of the trial judge on the issue as to purpose. He said:
55.If, in the final analysis, the decisive question were to be whether the appellants acted with a sole purpose of commission farming, or also with a collateral purpose of creating an appearance of active trading which would assist their exit from the market at the end of a day, the further evidence of Mr Rigby referred to in para 53 above was inadmissible, but the evidence referred to in para 54 was admissible. It was controversial, and was challenged, on the ground that it failed to take sufficient account of the role and obligations, theoretical or practical, of the liquidity provider. Part of the case for the appellants was that they never had any difficulty in selling out at the end of a day, and in most cases they sold to the liquidity provider. Their argument was that the liquidity provider satisfied their need for smooth passage out of the market at the end of a day’s trading, and there was no need for them to be concerned with the appearance of liquidity created by their circular trading. Mr Rigby responded with a further elaboration. He said that even if MEAL was obliged to buy back the warrants that the appellants wished to sell before the end of the day, it was under no obligation that he knew of to buy back at a convenient or attractive price. Therefore, he said, the creation of an appearance of liquidity tended to “enhance the possibility of a more favourable exit price”. This, it was argued for the appellants, was a shifting of ground, and raised a purely theoretical concern that was unrelated to what happened in the course of the appellants’ actual trading. Mr Rigby agreed in cross-examination that he saw nothing that suggested to him that the prices paid by MEAL when the warrants were sold back were anything other than reasonable. They were very close to the prices at which the warrants were acquired. 56.The experts for the appellants also expressed their opinions on the ultimate question of purpose. Dr Vinaimont, describing the trading of the appellants as “arbitrage”, (a description that was at least tendentious), said: “The purpose of these trades is to conduct arbitrage to take advantage of the imbalance created by the discount arrangement”. It was legitimate for Dr Vinaimont to point out that Macquarie’s rebate scheme created a market anomaly, and that activity of the kind engaged in by the appellants profited from that anomaly. Arbitrage is trading activity which takes advantage of a different form of market anomaly. In cross-examination, prosecuting counsel put to Dr Vinaimont that he could see no purpose of the appellants other than taking advantage of the commission rebate scheme. Dr Vinaimont replied that “the purpose was to exploit this arbitrage opportunity”. Mr White gave the following evidence in the course of his cross-examination:
57.Having received the expert evidence, initially over objection, the trial judge dealt with it in his Reasons for Verdict as follows:
58.For the reasons given above, the statements by the experts of their respective opinions about purpose or purposes of the trading activities of the appellants was inadmissible. The ultimate decision of the trial judge to disregard them was correct. On the other hand, the experts also gave evidence about the derivatives market that was relevant to the issue of purpose. It will be necessary to examine the consequences, for the outcome of the trial, of the learned judge’s decision to treat what the experts had to say as a matter of academic interest, and to rely upon common sense. The Reasons for Verdict 59.The trial judge, rejecting a defence argument that the trading of the appellants was “real”, said that “they simply traded with each other at the same price to earn [rebates]”. This he described as a “game”. The appellants were able to trade profitably between themselves at the same price because of the warrant issuers’ commission rebate scheme; the price of the warrant was not of concern to them, assuming they were able to get out of the market without suffering a capital loss at the end of the day. Sometimes, during the day, the appellants traded with a third party, but that was unavoidable in an open market. Basically, the judge said, the appellants just wanted to trade with themselves. He concluded that the resulting appearance was false or misleading. This conclusion was correct. 60.Addressing the mental elements referred to in s 295(1), the judge dealt both with intention and recklessness. 61.As to intention, citing Archbold Hong Kong 2010 at 20-19, the judge said:
62.The judge found that the case fell within (2). The trading was not real, but it had the virtually certain consequence of creating the appearance of real activity. The finding of intention was not based on (1), that is to say, a purpose of causing the result. 63.Alternatively, in case his finding of intention was found to be wrong, the judge, applying an established test of recklessness (not challenged in this appeal), found that the appellants were aware of the risk of creating a false appearance, and acted unreasonably in taking the risk, and that their conduct was reckless. 64.The finding that the conduct of the appellants was at least reckless was correct. 65.Treating s 295(5) as a deeming provision, the judge said that the conduct of the appellants was within the provision, although even without it the case would have come within subs (1). He was correct to say the case fell within subs (5). 66.The judge then addressed the defence provided by subs (7). He accepted a submission made on behalf of the appellants that subss (5) and (7) should be read down so as to impose only an evidential burden on the appellants, leaving the prosecution with the legal onus of negativing the defence. This is a matter to which I shall return. He held that the prosecution had discharged its onus. He was “satisfied that by their trading the Ds had a purpose to create a false or misleading appearance of active trading in warrants”. 67.The judge said:
68.The reasoning of the trial judge on this issue, based, as he said, on common sense and not on the expert evidence, addressed the defence argument that, with MEAL acting as liquidity provider, the appellants’ capacity to exit the market at the end of the day was for practical purposes assured. In most cases the warrants were sold to MEAL at the same, or almost the same, price as the price at which the appellants last traded with each other. 69.The judge dealt with the defence argument as follows:
70.The judge reasoned that the appellants were confronted with a forensic dilemma. Either they knew at the commencement of a trading day that MEAL would buy back the warrants at the end of the day at more or less the same price as the price at which the appellants were trading, or they did not. In the former case they were complicit in a Macquarie scheme to create a false appearance of active trading for the purpose of attracting other investors into the market. In the latter case they had a purpose of creating the false appearance to facilitate their own exit from the market. The judge said he could not be sure, on the evidence, if the former position applied, “so [his] finding [was] that they did not know”. 71.A number of comments may be made about that reasoning:
72.The above reasoning was challenged in the Court of Appeal, but the Court of Appeal found it unnecessary to deal with the issue. The judgment of the Court of Appeal 73.The reasons of the Court of Appeal (Stock VP, Yeung JA and Lunn J) were delivered by Lunn J. The Court of Appeal refused leave to appeal against the convictions. 74.The Court of Appeal decided that the s 295(7) defence was irrelevant, and that it was unnecessary to consider the grounds of appeal that went to the way the trial judge dealt with that issue. Describing the findings of the trial judge as hierarchical, the Court of Appeal found no error in the conclusion that, regardless of subs (5), the case fell within subs (1) of s 295, and treated the reasoning on subss (5) and (7) as superfluous. The convictions could be sustained without reference either to subs (5) or subs (7). The court said:
75.It was the failure of the Court of Appeal to deal with the arguments of the appellants as to subss (5) and (7) of s 295 that resulted in the grant of leave to appeal to this Court. The Court of Appeal acted on the basis that, even if the conduct alleged in a case falls within subs (5)(b) and (c), the defence given by subs (7) is not available if the case also falls within subs (1) independently of subs (5). That, then, is the first question to be considered by this Court. If the Court of Appeal were wrong about that, then it will be necessary to examine the operation of the subs (7) defence in the present case. That raises a question as to onus of proof, and a further question as to the appellants’ challenge to the reasoning of the trial judge. The relevance of s 295(7) 76.The evidence supported a finding that the appellants were associates. The circular trading between them on each of the 20 days in question was conduct falling within paras (b) and (c) of subs (5) of s 295. The subsection says that the appellants shall, for the purposes of subs (1), be regarded as doing something with the intention that, or being reckless as to whether it has, or is likely to have, a certain effect. The words “without limiting the generality of subsection (1)” mean that the special treatment in subs (5) of conduct described in paras (a), (b) and (c) does not diminish the width of subs (1). They do not mean that, if a case falls within subs (1), then subs (5) is to be, or may at the election of the prosecutor be, disregarded. This is because of the language of subs (7). 77.Subsection (7) by its terms applies according to the nature of the charge (relevantly, an offence under subs (6) in respect of a contravention of subs (1)), and the nature of the act through the commission of which the alleged contravention takes place. These are matters to be determined objectively, by reference to the charge, the particulars of the charge, and the evidence of the acts committed. Subsection (1) prohibits doing anything with the intention of creating, or being reckless as to whether it creates, a proscribed appearance. Subsection (5) provides that certain forms of conduct shall be regarded for the purposes of subs (1) as being done with such a state of mind. For subs (7) to operate, they are not necessarily inconsistent with the exculpatory state of mind referred to (negatively) in subs (7). The present case provides an example. The primary judge found intention, or alternatively, recklessness within subs (7). Recklessness under subs (1) is consistent with an exculpatory state of mind under subs (7). The finding of intention was made under a rubric that a result, “though it is not the actor’s purpose to cause it”, was virtually certain. 78.Subsection (7) is not subject to a qualification, express or implied, that the defence referred to does not apply where, apart from subs (5), the case would have been covered by subs (1). Plainly, according to its terms, it requires the defendant to prove the facts which constitute the defence. (Whether, for constitutional reasons, it is to be applied as having a different effect is a question that will need to be considered). In a statutory context where “anything” done with a certain state of mind is prohibited, the prosecution bearing the onus of proving the state of mind beyond reasonable doubt, the legislation deals specifically with three kinds of conduct providing, first, that the conduct shall be regarded as having been done with such a state of mind, and secondly, that it is a defence to prove that the conduct occurred without a proscribed purpose. Proof that one or more of these three forms of conduct occurred will, without more, be proof of an offence unless the defendant can give an innocent explanation. To be innocent, the explanation must reveal that there was no purpose of creating the forbidden appearance. 79.Section 295 assumes that the exculpatory state of mind referred to in subs (7) is consistent with the state of mind deemed by subs (5). To provide that, if the deemed state of mind is also found to be the actual state of mind, the subs (7) defence does not apply would be illogical. In any event, the section does not say that. Ordinarily, legislation creating a criminal offence should be applied according to its terms, and not subject to an implication adverse to an accused. Purpose 80.Section 295 refers to three states of mind: intention, recklessness and purpose. A purpose postulated by s 295(7) is a purpose that was not the purpose of creating a false or misleading appearance, in a case where the defendant is to be regarded as having the intention of creating such an appearance or as being reckless as to that state of affairs. The purpose and the intention referred to in the section are both subjective, but they are at least potentially different. 81.The intention referred to s 295(1) is what was described by Brennan J in the He Kaw Teh v The Queen[11] as a specific intent, that is, an intent to cause the result to which the intent is expressed to relate. The purpose referred to in s 295(7) is the objective which the defendant seeks to achieve by engaging in the conduct described in subs (5). This is different from motive, which is the reason for which the defendant is acting in pursuit of the objective. Motive may be as commonplace as a desire to make money, or it may be complex. The section contemplates the possibility that a person who engages in conduct of the kind described in (5) may act in pursuit of more than one objective, and that one objective may be that of creating the false and misleading appearance described. 82.It is clear in this case, and was agreed on all sides, that the appellants engaged in their circular trading with the objective of earning the commission rebates that were on offer. They were not seeking to profit from the exercise of skill in selecting investments, or from favourable movements in the market. The profits they sought were generated by their own activity; not by changes in market prices. That did not mean, however, that they were likely to have been indifferent to possible movements in market prices. They did not give evidence. Their purposes (if more than one) were entirely a matter of inference. A tribunal of fact was entitled to infer that they acted in pursuit of their economic interests. That is why it was generally agreed that it was safe to infer that they were doing what they did for the purpose of earning commission rebates. It was an inference drawn from an observation of their conduct and of the market conditions in which they acted, and an assumption that they were pursuing their interests. It was based on powerful circumstantial evidence. The hypothesis that they had an additional objective was also based upon an analysis of their economic interests. The hypothesis was that an objective they pursued by their circular trading was defensive: they were minimising the risk associated with their trading by creating a false appearance of activity in the market in order to facilitate their exit. For this, the circumstantial evidence was less compelling. It was argued that it was non-existent. This was the area of factual dispute considered above, and was one of the issues the appellants attempted to raise in the Court of Appeal. Onus of Proof 83.In North v Marra Developments Ltd[12], the High Court of Australia was concerned with s 70 of the Securities Industry Act 1970 (NSW), the predecessor of s 998 of the Corporations Law. It prohibited creating, or doing anything calculated to create, a false or misleading appearance of active trading in a market, or a false or misleading appearance with respect to the market or the price of securities. Mason J said (at 58-59) :
84.The difficulty of deciding how to achieve the objective of seeking to ensure that the market reflects the forces of genuine supply and demand while at the same time leaving people free to engage in legitimate commercial activity for collateral purposes is reflected in the refinements over time of the statutes dealing with this problem. The problem is to identify the conduct to be prohibited, while at the same time not penalising legitimate commercial behavior that may have a consequential effect on a market. It is in the nature of a market for securities that potential traders are likely to rely on outward appearances, but the commercial or other purposes of some of the activity in the market may be peculiarly within the knowledge of individual participants. 85.In s 295 the legislation, so far as is presently relevant, has approached the problem in a series of steps. First, there is a general prohibition of anything done with the intention of creating a false or misleading market appearance. Recklessness is equated with intention. Then, specific kinds of conduct (wash sales and matched orders) are, by a deeming provision, brought within the general prohibition. In the case of such conduct, however, a defence is created by which a defendant can escape liability by proving an absence of a purpose of creating a false market appearance. There was a refinement of the second step. The deeming does not apply in the case of an off-market transaction. In effect, the legislation provides that, if transacted on market, wash sales and matched orders will be regarded as conduct falling within the subs (1) prohibition, without proof of anything more than the objective facts, unless the defendant can provide an innocent explanation, by showing that the purpose was not, or did not include, the purpose of creating a misleading appearance of the kind identified. 86.To take as an example conduct of the kind covered by para (a), there could be a number of reasons why parties might enter into a sale of securities that does not involve a change of beneficial ownership. They may include fiscal reasons, or reasons related to rearrangement of corporate structures or family relationships. In some cases, however, the advancement of an innocent purpose (that is, a purpose of a kind unconnected with the creation of a false appearance with respect to the market) could be achieved, without any effect on the market, by an off-market transaction. The legislative approach is that, if such a transaction is entered into on the market, it is prohibited unless the parties can show that they had no purpose of creating a false or misleading market appearance. 87.This general approach to regulation of the securities market, aimed at preventing what the heading to s 295 calls “false trading”, or what the heading to the Australian section called “false trading and market rigging”, has a long history. Wash sales and matched orders are not prohibited per se, but, in Hong Kong, if they are transacted on the market, then they will involve an offence unless the parties can show that the purpose or purposes of the transaction was not, or did not include, a proscribed purpose. How does this measure up against art 87 of the Basic Law, and art 11(1) of the Bill of Rights (given constitutional effect by art 39 of the Basic Law), which give constitutional status to the presumption of innocence? The analysis to be undertaken to answer that question is well established. It is to be found, for example, in the judgment of Mr Justice Ribeiro PJ in HKSAR v Ng Po On[13], applying HKSAR v Lam Kwong Wei and Another[14]. 88.As a matter of construction of s 295, it is clear that the combined effect of subss (5) and (7) is to impose a persuasive burden of proof on a defendant which, according to settled principle, is to be discharged on the balance of probabilities. 89.The presumption of innocence is engaged. In the case of Ng Po On[15], Mr Justice Ribeiro PJ said:
90.There is a rational connection between the imposition of a persuasive burden on a defendant and the pursuit of a legitimate societal aim: in this case the maintenance of an orderly and fair securities market. 91.The critical question concerns proportionality. Is the imposition of the reverse persuasive onus no more than is necessary to achieve the legitimate societal aim? Specifically, would an evidential burden suffice? 92.It is instructive to consider a recent decision of this Court on trade mark legislation: Lee To Nei v HKSAR[16]. Section 9(2) of the Trade Descriptions Ordinance makes it an offence for a person to possess for sale goods to which a forged trade mark is applied. Section 26(4) provides that in proceedings for an offence under s 9(2) it is a defence for the person charged to prove that he did not know, had no reason to suspect and could not with reasonable diligence have ascertained that a forged trade mark had been applied. United Kingdom legislation on the same subject, which placed a reverse onus on a defendant to show that he believed on reasonable grounds that there was no trade mark infringement, had been found by the House of Lords, in R v Johnstone[17] to be compatible with art 6(2) of the European Convention on Human Rights and, in particular, to satisfy the proportionality requirement. 93.In R v Johnstone, Lord Nicholls of Birkenhead[18] referred to six factors relevant to a judgment on proportionality. They may be summarised as follows: (1) Counterfeiting is a serious problem involving fraudulent conduct with adverse effects on genuine trade. (2) The substantive offence in question was of near absolute liability. (3) The prescribed punishment demonstrated the potential seriousness of an offence. (4) Traders are aware of the risk of counterfeiting. (5) The defence related to facts within the accused’s own knowledge: his state of mind and the reasons for his belief. (6) The suppliers of counterfeit products are unlikely to assist the authorities. Those factors, in combination, justified the imposition of a persuasive burden on the defence. His Lordship said:
94.In Lee To Nei, this Court found that there was a qualitative difference between the United Kingdom defence and the Hong Kong legislation which was “crucial” (per Mr Justice Ribeiro PJ at paras [34] and [36]). The difference was that the Hong Kong defence required the defendant to satisfy the court that he could not with reasonable diligence have ascertained the falsity. This condition applied a standard of care independent of an accused person’s state of mind. It imported an objective test. The difference was held to have “a major impact on the proportionality inquiry” (per Mr Justice Ribeiro PJ at [40]. The requirement of proportionality was found not to have been satisfied. 95.In the case of s 295 of the SFO, the nature of the important and complex issue of securities market legislation addressed by the legislature has been considered above. The matter which has been identified as an answer to the otherwise unqualified prohibition of wash sales and matched orders in transactions conducted on the market is the purpose of the defendant in entering into the transaction. This is a matter of the defendant’s state of mind, and is likely to be peculiarly within the defendant’s knowledge. The legislature was entitled to take the view that it would be inadequate simply to impose on the defendant an evidential burden, leaving the prosecution with the legal burden of proving that the appellant had the proscribed purpose. The aim of the legislation was to stop short of imposing an absolute ban on wash sales or matched orders in market transactions, but to require a defendant to show an innocent explanation. In many, perhaps most cases, the capacity of the authorities to investigate and establish the purpose of trading is likely to be limited, and the defendant will have the capacity to raise, by argument or expert evidence, a realistic possibility of an innocent purpose sufficient to enliven the issue. 96.The proportionality test is satisfied. The appellants, on the issue raised by s 295(7), carried the persuasive burden of proof. In this respect, the case was dealt with by the trial judge upon an assumption unduly favourable to the appellants. The Court of Appeal did not deal with the matter of onus of proof, or with the consequences for the appellants’ challenge to the trial judge’s findings of fact on the s 295(7) issue of his approach to the matter of onus. Conclusions 97.For the reasons given above, the Court of Appeal erred in taking the view that subss (5) and (7) did not need to be considered, and the trial judge erred in dealing with the matter on the basis that, upon the issue raised by subs (7), the prosecution carried the persuasive burden of proof. 98.The error of the judge on the question of burden of proof was favourable to the appellants, but it did not follow that their proposed appeal to the Court of Appeal was bound to fail. They argued that, even if they bore the persuasive burden of proof on the subs (7) issue, the trial judge ought to have held that it had been discharged and the Court of Appeal, if it had dealt with the issue, ought to have quashed their convictions on the ground that the defence had been made out. 99.Apart from the matter of onus, for the reasons given in para 71 above, the factual reasoning of the trial judge on the subs (7) issue is open to criticism. The existence of at least a primary purpose that was not the proscribed purpose was obvious once the primary facts relating to the trading appeared. The question then was whether that was their sole purpose, or whether they had the secondary purpose contended for by the prosecution. It was for the appellants to satisfy the judge, on the balance of probabilities, that the answer was in the negative. The judge concluded that he was satisfied beyond reasonable doubt that the answer was in the affirmative, but the reasons he gave for that conclusion are unconvincing. 100.The appellants, in their Supplemental Written Case, submitted that the evidence showed their sole purpose was to make a gain from the rebate scheme. They submitted that “at no stage did the prosecution put to the Appellants’ experts that the purpose of the trading included that of creating a false or misleading appearance of active trading”. The liquidity generated by the trading, it was argued, was the consequence of the trading, not part of the reason for it. The role of the liquidity provider MEAL was stressed. 101.There is circularity about the secondary purpose attributed to the appellants. The prices of the warrants in which they were trading remained fairly stable over each of the days upon which they were active. They sold out, usually to MEAL, at about the prices at which they bought in. They did not encourage, or apparently seek to encourage, other investors to buy the warrants at a higher price, and there appears to be no evidence to support an inference that MEAL required encouragement to buy back at about the original prices. The buying and selling between the appellants was both sufficient and necessary to achieve their commercial purpose of earning rebates. The hypothesis that it was undertaken partly in aid of some additional objective should have been rejected. The appellants made out their s 295(7) defence. 102.A feature of this case is that the purpose of pursuing commission rebates, a purpose that was consistent with a defence under s 295(7), was obvious once the primary facts were established. In many, perhaps most, cases a defendant will need to give evidence in order to discharge the persuasive burden of proof. Arguments advanced by counsel, or developed on the basis of expert witnesses, will not suffice where the existence of an innocent purpose remains speculative. In this case, the reason for the behaviour of the appellants was plain. The convictions should be quashed. There should be no order for a new trial.
103.I propose that the following orders be made in the case of each appeal:
Mr Justice Bokhary PJ : 104.The Court unanimously makes the orders set out in the concluding paragraph of Mr Justice Gleeson NPJ’s judgment.
Mr Peter Duncan, SC, Mr Edwin Choy and Mr Philip Chan, instructed by Haldanes, for the appellants Mr Kevin P Zervos, SC, DPP, Mr David Leung, SADPP and Ms Mickey Fung, SPP of Director of Public Prosecutions, for the respondent [1] s 295(1)(a) : A person shall not …. do anything or cause anything to be done, with the intention that, or being reckless as to whether, it has, or is likely to have, the effect of creating a false or misleading appearance – (a) of active trading in securities….on a relevant recognized market [2] (2006) 228 CLR 45 at 88-90; [2006] HCA 44. [3] (2011) 243 CLR 434; [2011] HCA 14. [4] (2006) 9 HKCFAR 574. [5] (2008) 11 HKCFAR 91. [6] FACC No 5 of 2011, FACC No 7 of 2011, 30 March 2012. [7] (1981) 148 CLR 42 at 59; [1981] HCA 68. [8] (2011) 243 CLR 588; [2011] HCA 21. [9] HG v The Queen (1999) 197 CLR 414 at 428-429; [1999] HCA 2. [10] Folkes v Chadd (1782) 3 Dougl. 157 [99 E.R. 589], cited in Clark v Ryan (1960) 103 CLR 486 at 502. [11] (1984) 157 CLR 523 at 569-570; [1985] HCA 43. [12] (1981) 148 CLR 42; [1981] HCA 68. [13] (2008) 11 HKCFAR 91. [14] (2006) 9 HKCFAR 574. [15] (2008) 11 HKCFAR 91 at 106. [16] FACC No 5 of 2011, FACC No 7 of 2011, 30 March 2012. [17] [2003] 1 WLR 1736. [18] [2003] 1 WLR at 1750-1751. |
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