SFC takes Taste•Gourmet executives to tribunal over alleged share price manipulation

Hong Kong’s Securities and Futures Commission (SFC) has started proceedings in the Market Misconduct Tribunal against three senior executives of Taste•Gourmet Group Limited and five of their relatives, employees and close associates. The SFC alleges they manipulated the company’s share price to support a planned transfer of its listing from GEM to the Main Board of the Stock Exchange of Hong Kong. It announced the case on 22 October.

Who is named

The executives are Wong Ngai Shan, the chairman and co-founder; Chan Wai Chun, the chief executive and co-founder; and Yu Man To Gerald Maximillian, who was chief financial officer at the time. The other five named are Olivia Chan, Wong Ngai Ming, Huang Yizhen, Wong Ka Ying and Chan Man. According to the SFC, they include Wong’s elder brother, two of Wong’s nieces who work for the company, and another company employee.

What the SFC alleges

The SFC alleges that between 1 June and 18 September 2020 the three executives directed or coordinated trading by the five others to push the share price up and hold it at around $1.32. That was the price the company needed, given its 379,732,000 shares then in issue, to meet the $500 million minimum market capitalisation for a transfer to the Main Board.

Over that period the shares rose 86%, from $0.73 to $1.36. The regulator says the trading showed the hallmarks of manipulation, including aggressive buy orders near the market close and orders that moved or set the closing price. On six days, the allegedly coordinated trades were the only trades in the stock. The SFC also points to messages among the group about a target price and how and when to place orders, and to large transfers of money that were used shortly afterwards to buy the shares.

The shares first closed above $1.32 on 27 July 2020. The company applied to transfer to the Main Board on 5 August 2020, when the shares closed at $1.35, but the move did not go ahead as planned. Taste•Gourmet remains listed on GEM under stock code 8371.

What it means for traders

The case is a reminder that a run of closing-auction buying in a thinly traded small cap can be the work of insiders rather than genuine demand. When the same few accounts make up all of a day’s volume, the price on screen says little about what other buyers would pay.

What happens next

These are allegations only. The tribunal will decide whether any market misconduct took place and, if so, who was responsible.