Clifford Chance
SFC's claim of alleged insider dealing struck out by Hong Kong's Court of First Instance as 'an abuse of process'
21 September 2012
In a recent decision by the Court of First Instance of Hong Kong, (the High Court), Securities and Futures Commission (SFC) v Lee Sung Ho and Others (HCA 2177A/2011), the High Court has struck out the SFC's claim (writ) of alleged insider dealing against one defendant, discharged worldwide interim injunctions granted in relation to three other defendants and awarded costs against the SFC in favour of all six defendants. In the judgment of 5th September 2012, Mr. Justice Barma described the SFC's writ against one of the defendants as being "at best, speculative" and further stated that "the SFC's assertion that the transactions were not genuine ones did not appear to have any solid basis". The High Court affirmed the SFC's power to pursue substantively claims for insider dealing through the court, rather than the slower process of a full investigation and then a referral to the Market Misconduct Tribunal. However, the case suggests that bringing direct court proceedings, particularly where started with interim injunction relief, can carry greater risks for the SFC.
