The Court of Appeal today upheld the decision of the Court of First Instance (CFI) which had ruled in favour of an insider dealing and fraud case brought by the Securities and Futures Commission (SFC) against two solicitors – Ms Betty Young Bik Fung and Mr Eric Lee Kwok Wa – and Lee’s two sisters.

On 15 January 2016, the CFI found Young, Lee and his sister Ms Patsy Lee Siu Ying contravened the Securities and Futures Ordinance (SFO) by insider dealing in the shares of Asia Satellite Telecommunications Holdings Ltd and section 300 of the SFO (section 300) by engaging in fraud or deception in transactions involving the shares of Taiwan-listed Hsinchu International Bank Company Ltd (Hsinchu Bank) (Note 1).

The CFI also made restoration orders against Lee’s other sister, Ms Stella Lee Siu Fan, under section 213 of the SFO in respect of the same transactions.

In February 2016, all four defendants appealed against the CFI’s decision, but Young withdrew her appeal shortly before the September 2017 hearing in the Court of Appeal.

The trio argued in their appeal that:

  • The CFI failed to properly consider the evidence they adduced at the trial;
  • Section 300 was not applicable to their conduct in relation to the Hsinchu Bank shares because (i) the Hong Kong courts have no jurisdiction over trading activities carried out on the Taiwanese Stock Exchange; (ii) the supposed victims of their alleged fraudulent activities were not counterparties to their trades conducted on the Taiwanese Stock Exchange; and (iii) the alleged fraudulent or deceptive activities and the trading activities were not sufficiently related to form the elements of section 300.

The Court of Appeal disagreed and held that:

  • The CFI did properly consider the defendants’ evidence and draw proper inferences;
  • Hong Kong courts had jurisdiction to hear this case because a substantial measure of activities constituting the contravention took place in Hong Kong;
  • The application of section 300 would not be limited to a case in which the counterparties in the securities transaction were the victims of the fraud; and
  • Although the fraud was not directed at the counterparties to the subsequent trading activities on the Taiwanese Stock Exchange, the fraud or deception and the subsequent trading activities were sufficiently related (i.e. there was a real and substantial nexus) to form the elements of section 300.

The SFC’s Executive Director of Enforcement, Mr Thomas Atkinson, said: “We welcome the Court of Appeal’s judgment clarifying the interpretation of section 300.  The SFC will vigorously pursue enforcement actions to combat violation of the SFO when a substantial measure of activities designed to breach the SFO occur in our jurisdiction even if it involves securities traded on exchanges outside Hong Kong”.

Lawyers for Stella Lee argued that she should not be ordered to restore her counterparties since she was found not to have participated in the insider dealing.  But the Court of Appeal upheld the restoration order against her because (i) there is no assertion that the making of the order will prejudice her beyond removing the profits made; and (ii) her investment decisions were prompted or influenced by the disclosure to her of information that was based on the inside information even though she was unaware of that.



  1. Please see the SFC’s press release dated 15 January 2016.