On 10 September 2018, the Court of Appeal allowed the appeal by the SFC in Securities and Futures Commission v Cheng Chak Ngok and Market Misconduct Tribunal [2018] HKCA 590.

The Market Misconduct Tribunal conducted an inquiry as to alleged market misconduct activities in the nature of insider trading in respect of dealings in the securities of China Gas Holdings Limited (Stock Code 0384).  The Tribunal found that Cheng had not committed insider dealing on the basis that there was insufficient evidence to show Cheng had ‘dealt with’ the relevant shares.  The SFC appealed against that decision.

In allowing the appeal, the Court of Appeal gave guidance regarding the allocation of burden of proof and the evaluation of factual matters by the Tribunal.  Particularly, the Court of Appeal held that in an inquisitorial inquiry by a tribunal there is no place for the requirement of burden of proof.

The matter has been remitted for re-determination on whether Cheng had ‘dealt with’ the shares.

Paul Lam SC, Bernard Mak and Ernest Ng, acted for the 1st Respondent, instructed by Michael Li & Co.

The full judgment is available here.