Case Studies

Our case studies contain analysis and discussion points for users to better understand the legal provisions. They also provide suggestions on how to prevent corruption, fraud and malpractices.

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All Areas of Concern

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All Areas of Concern


Robert is a fund manager of an international asset management company, who manages the provident funds for certain large corporations.   One day, he receives a research report from an analyst stating that the profit margin of Hydroplane is expected to be high in the forthcoming three years.

 

Robert, therefore, plans to buy a substantial amount of Hydroplane’s shares for his provident funds portfolios.   Knowing that such a bulk purchase will likely boost its share price, he decides to place an order for himself through an external broker before sending out the purchase instruction to the dealing room for his provident funds portfolios.

Benny is a manager of a financial corporation and undertakes a merger project for Interlock Company and Happy Diet Chain.   Led by a director, he and his team members have held meetings with the management of these two companies, day and night, trying hard to work out the best terms for the exercise.

 

Benny knows full well that if such information is made public, it will affect the share prices of both companies.   But Benny also has other things on his mind. Soon he is to get married and desperately needs to find the money for his wedding expenses.   He finally decides to borrow some money from his family to purchase a large quantity of the two stocks in advance.   A week later, when the announcement of a merger between Interlock and Happy Diet is made public, the market prices of their shares rise spontaneously.   Benny subsequently sells the stocks and makes substantial profits.

Billy is a sales manager of a securities company.  On one occasion, he recommends his client, Joe, to purchase the stocks of Earth Bank at the price of

$10 per share because of its favourable development.   Joe thus places an order with Billy to purchase 150,000 shares.   As Billy also wants to buy the stocks of Earth Bank, he therefore aggregates his own order of 50,000 shares with that of Joe’s.

 

Because of the huge demand of Earth Bank's stocks in the market, Billy can only acquire 150,000 shares.   He then allocates the stocks in the proportion of Joe's order and his own.   As a result, 37,500 shares are allocated into his own account and the remaining 112,500 shares into Joe’s account.

Eddie is a director of a financial group which engages in businesses of securities and futures, asset management and corporate finance.   Recently, his company is appointed as an underwriter of a placement deal for Small World Corporation.

 

Because the share price offered is not particularly attractive, Eddie is a little worried that the stocks of Small World Corporation cannot be fully subscribed by investors in the market and this will force his company to acquire the remaining portion.      Therefore,   he   instructs   Jacob,   a   fund   manager   in   the   asset management division, to purchase a substantial amount of the stocks for his discretionary clients.

Raymond  is  a  fund  manager  who  manages  the  provident  funds  in  a medium-sized asset management company.  His wife, Jenny, is an account executive in a brokerage firm.   Recently, Jenny has been under pressure from her employer to generate more business.   Due to the keen competition within the industry, she is unable to meet the quota for finding new clients.   In order to help his wife, Raymond makes use of his official position to place business with her without observing his company policy on the selection of external brokers.


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