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Court Of Final Appeal Allows Hong Kong Securities and Futures Commission’s Appeal Against MMT Decision On Insider Dealing In Asia Telemedia Limited Shares

Date 12/10/2018

The Court of Final Appeal (CFA) today allowed the Securities and Futures Commission’s (SFC) appeal against the Market Misconduct Tribunal’s (MMT) findings that two former executives of Asia Telemedia Limited (ATML) (now known as Yunfeng Financial Group Limited), Mr Charles Yiu Hoi Ying and Ms Marian Wong Nam, had not engaged in insider dealing (Note 1).

The MMT in a decision in November 2015 acquitted Yiu and Wong on the basis of their defence under section 271(3) of the Securities and Futures Ordinance (SFO), which provided that a person should be acquitted if he did not have a purpose of making profit by using inside information (Note 2).

The MMT found that (i) the sole motivation of Yiu and Wong in selling ATML shares was to seize the opportunity to sell at the surge prices and (ii) they did not use the inside information since they believed that whatever threatened the share price of ATML stemming from the company’s problems would be resolved “behind closed doors” in the future, and would not influence the market price of the shares.

The Court of Appeal upheld the MMT’s decision in April 2017 following an appeal brought by the SFC which argued that the defence under section 271(3) of the SFO should not be applicable to Yiu and Wong. 

The CFA, in a majority decision of four to one, held that Yiu and Wong failed to establish that they did not use inside information to secure profits.  In selling ATML shares, they did take advantage of their knowledge that the prices they were securing would not have been achievable if the information was disclosed to the market.  By doing so, they were using inside information and so were excluded from the defence under section 271(3) of the SFO.

When Yiu and Wong traded their shares for profit, they were using the inside information at that very time and a belief as to what might happen in the future to resolve ATML’s problems was not relevant.

In the dissenting judgment, Mr Justice Tang PJ, held that the section 271(3) of the SFO defence should be interpreted to provide a defence for a defendant who can show that he would have done what he did even if he had not had the information.  On the facts, Tang PJ held that the MMT did not make an error in fact or in law.

In allowing the appeal, the CFA – in a majority of four to one – set aside the orders made by the Court of Appeal and the MMT and remitted the matter back to the MMT to deal with sanctions.

"We are pleased with the Court’s decision.  This case involves important points of law which goes to the heart of the insider dealing regime.  The SFC will continue to robustly combat insider dealing as it undermines the fairness and integrity of the market," the SFC’s Executive Director of Enforcement, Mr Thomas Atkinson, said.

The proceedings in the Court of First Instance under section 213 of the SFO against ATML’s former chairman, Mr Lu Ruifeng for his alleged insider dealing in ATML shares is still on-going (Note 3).


  1. The panel of judges comprised The Hon Ma CJ, The Hon Ribeiro PJ, The Hon Tang PJ, The Hon Fok PJ and The Hon Lord Neuberger of Abbotsbury, NPJ.  A copy of the CFA judgment can be found on the judiciary website (
  2. The MMT was chaired by The Hon Michael Hartmann with two lay members, Mr Stephen Chan Sai Hung and Dr Ricky Chu Keung Wah.  The MMT’s decision is available on its website (
  3. Please see the SFC’s press releases dated 2 May 20085 November 2008 and 6 December 201029 January 2014 and 26 November 201528 April 2017 and 24 August 2017.