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Obtaining bribe through a third party is also an offence
Jimmy was a sales manager of a renowned securities firm. Recently his company was appointed as the sub-underwriter of a profit-making business named Blue Water which was to be listed on the stock exchange. Jimmy was assigned to allocate Blue Water shares to clients. He quickly received numerous requests for purchase from investors who anticipated its share price to rise once the stocks were traded in public.
Amy was one of Jimmy's favourite clients. One day, Jimmy invited Amy for lunch. Over the table, he explained that he could allocate 100,000 shares of Blue Water to her in exchange for a return of 10,000 shares back to him. Jimmy asked Amy to arrange the 10,000 shares to an account held by a woman named Wendy in a small brokerage company. Amy later learned that Wendy was actually Jimmy's wife.
Case Analysis
Jimmy violated the Codes of Conduct[1] issued by Securities and Futures Commission because he preferentially allocated the shares to Amy, thereby giving favour to her and putting other clients at a disadvantage. He also breached Section 9 of the Prevention of Bribery Ordinance (POBO) by soliciting and accepting an advantage, i.e. 10,000 shares as a reward for allocating the Blue Water stocks to Amy despite the short supply. Although Jimmy asked Amy to place the stocks in the account of his wife, he was still guilty of a corruption offence. Under Section 9 of the POBO, a person is considered to have accepted an advantage even though another person acting on his behalf receives the advantage.
[1] Codes of Conduct refer to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, the Code of Conduct for Corporate Finance Adviser and the Fund Manager Code of Conduct.