The SFC has commenced criminal proceedings against Mr David Vong Tat Leong, CEO of Vongroup, alleging that he disclosed, or was involved in the disclosure, of false or misleading information which was either likely to induce transactions in the shares of Vongroup or maintain or increase its share price.
On 15 May 2007, Vongroup issued an announcement to the Hong Kong Stock Exchange and a press release disclosing that a company wholly owned by Mr Vong through which he held 72% of the issued share capital of Vongroup, was selling a 9.9% stake in Vongroup to ABN AMRO Bank NV. The share price of Vongroup rose 31.25% on the following day.
However, there were two additional agreements executed simultaneously, under which ABN AMRO secured the right to sell the shares back at the same price within three years, and the proceeds were retained in an escrow account pending either ABN AMRO selling the shares to an independent third party or the expiry of the put option.
It was asserted that the announcement failed to disclose the whole transaction, and that the investing public was misled into believing ABN AMRO had decided to support Vongroup in buying the shares when in fact the deal did not expose ABN AMRO to the same risks as other shareholders.