The Hong Kong Securities and Futures Commission has commenced criminal proceedings against Lam Kwong-yu, an independent non-executive director of China Southern Airlines and a former independent director of Hong Kong Aircraft Engineering Co, for alleged insider dealing.
The commission alleged Lam, 67, purchased 4,000 shares in the Hong Kong company on June 4, 2010, through an online securities trading account after being told about a proposed deal in which Cathay Pacific Airways, a shareholder of Hong Kong Aircraft, would sell its entire stake in the company to Swire Pacific Ltd.
The deal triggered a general offer for all shares in Hong Kong Aircraft at HK$105 per share, representing a premium of about 25 percent over the market price. Hong Kong Aircraft announced the deal on June 7, 2010. Lam resigned as an independent non-executive director of the company on June 6.
The commission also alleged that Lam sold the shares in the company after the announcement, making a profit of HK$80,000 (US$10,282).