Insider Dealing in Hong Kong: One Country Two Systems?

Abstract

Although the subject of an appeal to the Court of Appeal, the decision in Hong Kong Special Administrative Region v Du Jun is nonetheless noteworthy for two key reasons. First, the judgment of the District Court may be viewed as a harbinger of insider dealing enforcement to come in Hong Kong in the wake of perceived abuses and scandals of the global credit crisis of 2008. Secondly, it may be heralded as proof of the unequivocal intent of the Hong Kong Securities and Futures Commission to deter market manipulation through strict enforcement of its securities laws.However, the Du Jun case also emphasises certain weaknesses in the regulation and enforcement of insider dealing in Hong Kong. In particular, it highlights the questionable effectiveness of deterrence attempts that punish individuals while leaving their employers untouched. In the opinion of the authors, this omission raises important policy issues which, if left unrectified, might lead to the perception that there are, in practice, two sets of securities laws in Hong Kong.