Hong Kong Securities Regulatory Commission: Finds Pandison guilty of insider trading before disclosing HK$1.15 billion of unexpected corporate profits

Zhitong Finance App learned that the Hong Kong Market Misconduct Tribunal (Tribunal) ruled that Dyson Founders (00113), founder and former Group Executive Chairman and businessman, and Equity Advantage Limited (Equity), and his investment holding company Equity Advantage Limited (Equity) were guilty of insider trading in the company's shares after having insider information about a transaction that would eventually bring about HK$1.15 billion in cash to Dyson Foundations. The tribunal will decide on the sanctions and corresponding orders against Sir Pandison, Equity, and the Dickson Foundation at a later date.

In the same inquiry procedure brought by the Hong Kong Securities Regulatory Commission in the tribunal, the tribunal also ruled that the Dickson Foundation had violated the rules relating to disclosure of insider information due to Sir Pandyson's deliberate actions.

This case stems from PayPal Holdings, Inc.'s acquisition of Honey Science Corporation (Honey) for approximately $4 billion in November 2019. At the critical time, Dickson Holdings held about 3.73% of Honey's issued share capital, but the public was unaware of the shares. After the completion of the acquisition, Dyson Foundations is entitled to collect approximately US$147.6 million (HK$1.15 billion) in cash, making a profit of approximately HK$928.7 million based on the book value of its investment. This is highly price-sensitive information.

The tribunal determined that when Sir Pendison learned the insider information on November 21, 2019, he described it as “wonderful news (wonderful news)”, which shows that he was very excited and active. He immediately calculated that the deal would generate around $120 million in profit for the Dyson Foundation.

Meanwhile, Sir Pandison began trading after the sales ban expired on November 28, 2019. Until December 19, 2019, he purchased a total of 2,756,500 shares of Dyson Founding shares through Equity over 13 trading days, but the company has not disclosed the relevant information to the market until now.

The tribunal further ruled that Dyson Foundations failed to disclose the relevant insider information as soon as is reasonably practicable, and that the company's violation was blamed on Sir Pandyson's deliberate failure to share the insider information with other Dickson Founding personnel (including the company's board of directors), and that the company did not inform them of the incident until the company received the transaction documents at the end of December 2019. The tribunal ruled that Pan Guanda was not responsible for the company's irregularities because he had reasonable grounds to rely on his father, Sir Pandison, and other senior management to evaluate the relevant price-sensitive information.