HKSAR v. SO TAI FAI ANITA

CACC23/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 23 OF 2007

(ON APPEAL FROM DCCC NO. 361 OF 2006)

----------------------

--------------------

--------------------------------------------------------

REASONS  FOR  JUDGMENT

---------------------------------------------------------

Hon Saw J (giving the reasons for judgment of the Court):

1. In District Court Criminal Case No. 361 of 2006 So Tai Fai Anita (“the applicant”) was charged with 24 counts of ‘False Accounting’, contrary to section 19(1)(a) of the Theft Ordinance Cap. 210, (Charges 1–22, 27 and 28), 3 counts of ‘Using a False Instrument’, contrary to section 73 of the Crimes Ordinance, Cap. 200 (Charges 23–25) and 1 count of ‘Theft’, contrary to section 9 of the Theft Ordinance, Cap. 210 (Charge 26).

2. She pleaded not guilty to all charges.  At the end of the prosecution’s case, counsel for the prosecution conceded that there was no case to answer in respect of two of the charges of false accounting (Charges 8 and 9).  At the conclusion of the trial she was acquitted of four of the false accounting charges (Charges 19–22) and the theft charge. 

3. On each of the charges, she was sentenced by Deputy Judge E. Lin (“the Judge”) to 5 years’ imprisonment.  In each case the Judge ordered that the sentences were to be concurrent.  The applicant sought leave to appeal the convictions and the sentences.  On 31 October 2008 we dismissed the application for leave to appeal the convictions and we now give our reasons for so doing.  In regard to sentence, we reserved our decision we now give judgment as to this.

Background

4. It was the prosecution’s case that EAA Securities Limited (“EAA”) was a member of the Hong Kong Stock Exchange Limited.  Its business was trading in shares on the Hong Kong Stock Exchange.

5. Members of the public wishing to trade in shares through EAA had first to open an account.  A client who had an account with EAA was assigned to an employee of EAA who was described as an “account executive” who would be responsible for that client.  The account executive would be paid a commission for every transaction handled by him.  Normally the client gave instructions by telephone to the account executive.  Upon receipt of a client’s instructions, the account executive would write up a Bought or Sold Order (as the case may be), on which the client’s account number, date and the details of the instructions would be recorded.  He would also affix his signature to it.  The account executive would then pass the Bought or Sold order to other members of staff in the Dealing Room who would in turn carry out the instructions by placing a corresponding offer to purchase or sell shares via the computer system connected to the Hong Kong Stock Exchange.  If the offer was accepted the staff in the dealing room would inform the account executive who would then in turn relay the result to the client, usually by telephone.

6. The account executives were under the supervision of a Dealing Director.  At the end of the trading day, all Bought or Sold Orders signed by the account executives would be submitted to the Dealing Director who would countersign them before they were verified against the computer records of the Hong Kong Stock Exchange.  

7. After a transaction had been completed, the client would receive a copy of the Bought or Sold Order as a record.  In addition, a monthly statement recording all transactions for that month would be issued by EAA.  It was the responsibility of the account executive to arrange for these documents to be sent by post or handed to the client personally.

8. At all material times the applicant was a Dealing Director at EAA.  Apart from her supervisory duties in that capacity, she also acted as an account executive serving a number of clients in the same manner as did other account executives.  To avoid any conflict of interest, the applicant had a fixed monthly salary and earned no commissions for the transactions she handled.  When the applicant acted as an account executive, she was not subject to the same supervision and scrutiny as other account executives.  The Bought or Sold Orders made out by her would not be verified and countersigned by another.

The charges

9. All six persons named in the false accounting charges as the victims held an account for trading at EAA for which the applicant was the account executive.  Each gave evidence in the trial.  They were Tam Fei Hung (PW 7), Chong Yuen Tsun (PW 8), Chau Fai Hung (PW 9), Cheuk Kam Chuen (PW 10), Kwok Kui Lim (PW 11) and Siu Hon (PW 12). 

10. It was the prosecution’s case in respect of the false accounting charges that the applicant had traded in the accounts of her clients without their instructions or authorization by buying and selling shares.  In doing this, she had created fictitious Bought and Sold Orders.

11. Prior to the date of the charges the same clients accounts had accumulated substantial negative balances.  When the senior management at EAA became aware of this, they instructed the applicant to contact her clients to come up with repayment proposals.  The prosecution’s case was that on three occasions, the applicant falsified a document described as “Demand Note For Repayment”.  These were the documents referred to in the ‘Using a False Instrument’, charges namely 22–25.  The evidence was that the clients concerned had neither seen nor signed those documents nor were they aware that their accounts were in debit.  It was the prosecution’s case that the applicant prepared and submitted those documents to EAA, the effect of which was to forestall the management of EAA directly contacting the clients to pursue the recovery of the debit balances.  It was the prosecution’s case that had the applicant not done this then the debit balances in the accounts would have been revealed to the clients and more importantly that the applicant’s unauthorized use of those accounts also would have become known.

12. The applicant resigned from EAA in May 2002.  The existence of the unauthorized trading in the accounts came to light when one of the applicant’s clients enquired of EAA in November 2002, about the dividend accruing from some Hutchison Whampoa Limited shares which he thought he had in his EAA account.  As a result of this enquiry, EAA checked its records which showed that there were no shares owed to the client and that the client was in fact indebted to EAA in the sum of HK$588,709, (a debt which the client denied.)  EAA reported the matter to the Securities and Futures Commission and to the police. 

13. It was the prosecution’s case that the majority of the applicant’s unauthorized trades were “day trades”, ie. the shares were bought and sold on the same day, or shortly thereafter.  This enabled the applicant to trade without having to pay for the purchases because of what was known as the T + 2 rule.  The effect of this rule was that normally a client who purchased shares had to pay for them two days after the purchase date.  However if the shares were sold before that time they were not required to pay (at that stage).  If a buy-and-sell transaction resulted in a profit, the applicant would be able to reap the benefit without having to finance the purchase of the shares. 

14. For the 22 counts of false accounting, apart from the particulars in relation to date, identity of the victims and the subject shares, the substance of the charges was the same.  There was no issue in the trial that the Brought and Sold Orders were part of the records used by EAA for accounting purposes.  In the case of the false accounting charges upon which the applicant was convicted, there was no challenge to the evidence of the clients that they had not given instructions to the applicant to buy or sell the shares that the Bought or Sold Orders purported to reflect.  However, as will be seen this was not the situation vis-à-vis the charges that were dismissed.

15. The “Demand Notes For Repayment”, the subject matter of Charges 23–25, were almost identical.  They purported to be in part an acknowledgement of indebtedness and a repayment proposal.  They were forgeries and were intended to forestall more direct and proactive measures to recover the deficiencies in those accounts.  The judge in his Reasons for Verdict refers to them as the “Acknowledgement of Indebtedness Repayment Proposals”. 

16. The issues for the judge to determine were relatively straightforward.  For the false accounting charges he had to determine whether it was the applicant who conducted the unauthorized trading in the clients accounts and in so doing had prepared the respective Bought or Sold Orders.  For the ‘Using a False Instrument’ charges, the issue was whether it was the applicant who had created and submitted or caused to be submitted to EAA the Demand Notes For Repayment knowing them to be false and whether the management of EAA (namely PW6 Leung Kin Lam) had accepted the documents to the prejudice of EAA.

The evidence

17. Robert Euyuan Wu (PW1) was the Managing Director of EAA.  He gave a detailed account of the operation of EAA.  He stated that the applicant was the only Dealing Director responsible for the operational side of the brokerage business.

18. Lau Chak Wah (PW2) described in detail the procedures of trading in an account at EAA.  The most significant part of his evidence was that he identified the applicant’s signature on each of the Bought or Sold Orders referred to in the false accounting charges.

19. Lee Wai Ming (PW3) was employed in the Dealing Room at EAA.  Part of his duties involved receiving instructions from account executives and carrying these out by inputting data relating to the transactions into the computer system.  He said that in her capacity as an account executive, the applicant would call him up to give instructions and since she was also the Dealing Director, she did not have to countersign to confirm those orders, but instead she would just make a tick on the Bought or Sold Orders.  He also recognized the appellant’s signatures on the Bought or Sold Orders referred to in the charges.  PW3 also said that the tick in the box for ‘Remarks’ on the Bought or Sold Orders was placed there by the applicant to signify the completion of the transactions.

20. Some time in March 2000, PW3 became aware of the fact that there were substantial negative balances in some of the accounts handled by the applicant.  As a consequence he had a series of meetings with the applicant.  During the first meeting, she assured him that once the market improved, the clients should be able to repay.  PW1 then asked the applicant to speak to her clients.  She agreed to do this.

21. The problem was not resolved.  PW1 and the applicant met again 6 months later.  On this occasion, the applicant offered to arrange to meet her clients on an individual basis.  PW1 agreed and asked another member of staff, Susan Choo, to oversee this. 

22. Wong Sui Kuen Becky (PW4) was the Operations Manager of EAA.  She and Susan Choo Sook Sen (PW5) were both present at the meetings at which were discussed the negative balances in the applicant’s clients accounts.  PW5 said that the first of these meeting took place some time near the end of 2000 :it was proposed in that meeting to nominate a repayment deadline and a client who failed to meet this would have his stocks sold and the proceeds used to reimburse EAA.  The applicant was opposed to this and it was instead agreed that she, as the account executive responsible, would request her clients to submit written proposals for repayment.  It also emerged from the evidence of witnesses present at these meetings that the applicant appeared not to be surprised by the state of these accounts.

23. Leung Kin Lam (PW6) was in charge of the Settlement Department in mid 2000.  He was named in Charges 23–26 as the person at EAA misled by the forged Demand Notes For Repayment.  The essence of his evidence was that the provision of those documents had the effect of concealing the true position of the state of these accounts from EAA.

Evidence relating to Charges 4–5, 21–22 and 23

24. The first 4 charges of false accounting were concerned with transactions in the account of Tam Fei Hung.  Charges 4 and 5 related to a Bought Order and a Sold Order for the purchase and sale of 50,000 shares of Legend Holding Limited which took place on 30 and 31 August 2000.  Charges 21 and 22 related to a Bought Order and a Sold Order for the purchase and sale of 20,000 shares of PCCW, which took place on 9 and 12 February 2001.  Charge 23 related to a Demand Note for Repayment dated 28 February 2001 purportedly signed by Tam Fei Hung.

25. Tam Fei Hung (PW7) was a client of EAA and his account executive was the applicant.  He would deal in shares by giving oral instructions to her over the telephone.  He had always called the applicant to give instructions directly to her and had never given instructions to buy or sell shares to other staff members in the Dealing Room.  Normally after the completion of a trade PW7 would receive documents showing the details of the transaction including the number of shares purchased or sold, the price, the amount of commission, etc.  In addition, he said he would also receive a monthly statement recording all the transactions for the month and the status of his account.

26. It was PW7’s evidence that he had not authorized the purchase or sale of 50,000 shares of Legend Holding Limited.  However, in the case of the purchase and sale of the 20,000 shares of PCCW in February 2001 (Charges 21–22), he was less sure.  He did not know whether or not the transactions were on his instructions.  The applicant was acquitted of these two charges.

27. PW7 said that he had always paid on time and had never owed EAA money.  He had never seen the Demand Notes For Repayment (Charge 23) purportedly signed by him.  He did not know how it came into existence.  He did not sign it.

28. Sometime in January 2003, PW7 received a letter from the auditors of EAA advising him that he no longer had any shares in his account.  He immediately contacted the applicant who was by then no longer employed by EAA.  He was told by her that she had sold his shares.  She promised to buy back the same quantity of shares in the market and keep them for him in her new company.  Eventually she did just that.

29. Charges 6–7 and 10–11 related to 4 transactions in the account of Chong Yuen Tsun.  Charges 6 and 7 related to a Bought Order and a Sold Order for the purchase and sale of 300,000 shares of Culturecom Holdings Limited which took place on 6 September 2000.  Charges 10 and 11 related to a Bought Order and a Sold Order for the purchase and sale of 30,000 shares of MTR Corporation Limited which took place on 17 October 2000.  Charge 24 related to a Demand Note for Repayment dated 13 March 2001 purportedly signed by Chong Yuen Tsun.

30. Chong Yuen Tsun (PW8) had held an account with EAA since 1996.  He knew the applicant as a family friend.  When PW8 did trade using his account with EAA, he would give instructions to the applicant by telephone.  This would be followed by oral confirmation from the latter if the instructions were carried out.  After the transactions were completed he would receive written confirmation in the form of the Bought or Sold Orders.  PW8 had never given instructions for trading in his EAA account to anyone else at EAA.

31. PW8 said that he had not given instructions to buy and sell the 300,000 shares of Culturecom Holdings Limited on 6 September 2000 nor did he give instructions to buy and sell the 30,000 shares of MTR Corporation Limited.  Normally he received monthly statements by post but he did not receive any for the months of September and October 2000.   The evidence was that the statements had been sent to an address in Peng Chau which was not his address. 

32. He said that he did not sign the Demand Note For Repayment dated 13 March 2001 and the indebtedness of HK$663,680.93 stated thereon could not have been the result of any trading authorized by him.

33. Charges 8-9 and 27-28 were 4 charges of false accounting relating to transactions in the account of Chau Fai Hung (“PW9”).  Charges 8 and 9 related to a Bought order and a Sold order for the purchase and sale of 300,000 shares of PCCW, which took place on 21 and 25 September 2000.  These charges were dismissed after PW9 accepted that he had given instructions for those transactions.  Charges 27–28 related to a Bought Order and a Sold Order for the purchase and sale of 100,000 shares of Guangsheng Railway Company, which took place on 14 and 20 June 2001.

34. It was PW9’s evidence that he opened his account with EAA in May 1995.  At all times instructions were given by him to the applicant and to no one else.  In the normal course of events Bought or Sold Orders and monthly statements were either sent by post or handed to him personally by the applicant.  When shown the monthly statement dated 29 June 2001, PW9 pointed out that not only had he never seen this document before but also that the Peng Chau address thereon was not his.  He had never lived there and had never advised EAA of a change of address.  As to the purchase and sale of the 100,000 shares of Guangsheng Railway Company he said that he had never given instructions for those transactions.

35. Charges 3, 12, 17 and 18 were charges of false accounting relating to transactions in the account of Cheuk Kam Chuen.  Charges 3 and 12 related to a Bought Order and a Sold Order for the purchase and sale of 300,000 shares of Asia Logistics Technologies Limited which took place on 24 August 2000 and 13 November 2000.  Charges 17 and 18 related to a Bought Order and a Sold Order for the purchase and sale of 30,000 shares of PCCW which took place on 9 and 10 January 2001.  Charge 25 related to a Demand Note For Repayment dated 14 March 2001 purportedly signed by Cheuk Kam Chuen.

36. Cheuk Kam Chuen (PW10) opened his account with EAA on 3 January 1996.  He only carried out trading through the applicant.  He said that the amount of his investments was small and seldom exceeded $50,000 in one transaction.  Some time in 2000, he had ceased trading altogether.  He denied instructing anyone to make the purchase of the Asia Logistics Technologies Limited shares.  He said that the amount of the purchase namely HK$121,966.05 was in excess of his usual investment.  Likewise, he did not authorize the purchase and sale of the PCCW shares in January 2001.

37. PW10 was shown a copy of the Demand Note For Repayment purportedly signed by him.  He said that he never seen this document before and the signature thereon was not his.

38. Charges 13-16 were charges of false accounting in relation to transactions in the account of Kwok Kui Lim.  Charges 13 and 14 related to a Bought order and a Sold order for the purchase and sale of 200,000 shares of SGHGWL@EC0103 on the 12 and 13 December 2000.  Charges 15–16 related to a Bought Order and a Sold Order for the purchase and sale of 100,000 shares of PetroChina Company Limited on 14 and 28 December 2000.

39. Kwok Kui Lim (PW11) said that he opened his account with EAA on 1 January 2000.  All of his trading was conducted through the applicant and he had never given instructions to anyone else at EAA.

40. PW11 denied authorizing the purchase and/or sales of the stocks referred to in Charges 13–16.  He said that the purchases were well in excess of the amount he would normally spend on one trade.

41. Charges 1-2, 19-20 were charges of false accounting relating to transactions in the account of Siu Hon.  Charges 1 and 2 related to a Bought Order and a Sold Order for the purchase and sale of l00,000 shares of China Eastern Airline Corporation Limited on 8 and 10 August 2000.  Charges 19–20 related to a Bought Order and a Sold Order for the purchase and sale of 20,000 shares of Hong Kong Exchanges and Clearing Limited on 2 February 2001.  

42. Siu Hon (PW12) had known the applicant since 1984.  Some time in May 2000 at her suggestion she opened an account with EAA.  She kept the account for about 2 years and had traded in stocks 1 or 2 times per month and spent on each occasion $10,000 to $20,000.  Normally she would give instructions to the applicant by telephone.

43. She stated that she did not give instructions to buy or sell the China Eastern Airline Corporation Limited shares as she only traded in blue chip shares and she had never heard of this company.  She had never received the monthly statement dated 31 August 2000 in which those transactions were recorded.

44. As to the 20,000 shares of Hong Kong Exchanges and Clearing Limited (i.e. the subject matter of Charges 19 and 20), she was less sure.  She could only say that she did not authorize the transactions because she did not have the relevant Bought and Sold Orders in her possession.  The applicant was acquitted of those charges.

45. Charge 26 was the theft charge and was concerned with the sale of 10,000 PCCW shares on 23 April 2001.  PW12 confirmed that the PCCW shares were purchased on her instructions but could not be sure if she had authorized the sale of them.  The applicant was acquitted of this charge.

The application

Ground 1 read as follows :

“The learned trial judge wrongly refused an application for a stay of proceedings made at the beginning of the trial on the grounds of undue delay prejudicing a fair trial of the appellant.”

46. The particulars of this ground of appeal included a schedule in respect of the investigation which showed that it was almost 3 years from the date of the applicant first being arrested until she was finally charged. 

47. On the first day of the trial the applicant’s counsel applied to the judge to stay the proceeding against her. 

48. It was submitted that there were at the time of the unauthorized share trading, five other persons employed by EAA who were described as “Dealers”.  Mr Hoosen for the applicant both in this court and below, suggested to the judge that they could “shed light” on how the various Bought or Sold Orders came into being.  The judge was told that four of the five dealers were no longer in Hong Kong and the fifth was a prosecution witness, namely Lee Wai Ming (PW3).  Counsel submitted :

“… apart from LEE Wai Ming we understand the other dealers have all gone away.  As far as we know, they’ve either gone to China or the USA and they are not on the list of unused material.”

and later :

“They would be in a position to say things to clarify for the court what was happening in the dealing room; something must have gone amiss for these bought and sold orders to come into existence which were not pursuant to the instruction of the particular customers in question.”

49. It was this, in conjunction with the alleged delay in bringing the matter to trial which it was said required the judge to stay the proceeding permanently against the applicant.  As is noted by Mr Chapman, SADPP in his helpful written submissions, there was no attempt (beyond the submission referred to in para. 48 above) to support the assertions made that the applicant had been prejudiced.

50. Mr Hoosen, before us, readily accepted that it was not possible to say what evidence these persons could or indeed might have given, let alone whether it might have assisted the applicant.  In effect he accepted that it was not possible therefore to establish that she was in any way prejudiced by their absence. 

51. The judge, in his ruling, found that he was not satisfied that there was any evidence of undue delay or, even if there was delay, there was no prejudice demonstrated.  He was satisfied that there was no proper basis for the assertion that the applicant would be deprived of a fair trial.  We agree.

52. This ground of appeal failed.

53. The substance of the 2^nd perfected ground of appeal was that the judge was in error in concluding that the Bought or Sold Orders had been created by the applicant. 

54. Whilst it is technically correct to say, as the judge did, that there was no direct evidence to establish that the applicant personally made out the relevant documents or gave instructions to effect the transactions.  (there was no expert hand writing evidence), the evidence was overwhelmingly to the effect that she did just that.  The EAA staff who gave evidence said that they recognised the applicant’s handwriting on each of the Bought and Sold Orders. 

55. The submission by Mr Hoosen was that the judge could not rule out the possibility that someone else had prepared the Bought or Sold Orders.  In support of this ground of appeal, it was submitted that because PW3, Lee Wai Ming had accepted in the course of cross-examination that, on occasions, clients of EAA would telephone the dealing room to place orders (when they could not contact their own account executive) and that when this happened Bought or Sold Orders were created by someone in the dealing room, this raised the very real possibility that the applicant may have innocently signed the Bought or Sold Orders in her capacity as Dealing Director.  This submission ignores the evidence taken in its totality.  Whilst it is true to say that there was some evidence that there were occasions when those in the dealing room would take orders from clients and prepare Bought and Sold Orders, that evidence was qualified inasmuch as, if this happened, the Dealing Room staff had to advise the relevant account executive as soon as possible and provide the relevant details.

56. The submission also ignores the evidence of each of the victims which was that that they only ever gave instructions to the applicant.

57. This submission fails to address the fact that the relationship between the applicant and the relevant account holders was in the main part conducted on a one to one basis.  The legitimate trades that she conducted for them were done upon their direct oral instructions to her. 

58. Likewise, the suggestion that others may have created the Bought or Sold Orders is a hypothesis isolated from the whole of the evidence.  The evidence had to be considered in its totality.  It was the applicant who, in effect, controlled these accounts not a staff member in the dealing room.  It was the applicant who was able to conceal the unauthorized trading from the account holders.  It was the applicant who, when alerted to the negative balances in these accounts, apparently took no action with the account holders to remedy the situation.  Whilst in theory it might have been possible for another to falsify Bought or Sold Orders, it was in reality only the applicant who could ensure that the unauthorized trading remained concealed from the account holders. 

59. Likewise, the hypothesis that it was theoretically possible for persons other than the account executive to arrange for shares to be bought and sold using the account of another ignores the fact that this ability alone would serve them no purpose.  The unauthorized trading would be discovered within the course of that month unless of course the Bought or Sold Orders and monthly statements were concealed from the client.  There was no suggestion that anyone other than the applicant was in a position to do this.

60. The hypothetical possibility was no more than that.  The actual unauthorized trading in the accounts was one matter.  This had to be concealed, as it was, for a considerable period.  This could not be done by an errant dealer in this dealing room but by someone who had access to both the client and his/her personal details.

61. At the conclusion of that part of his written submissions, when dealing with the false accounting charges, Mr Hoosen submits :

“To summarise : the evidence admits of the real possibilities that none of the false notes were made by or even passed on to the applicant and that even if any of them were passed to her that she initialled them knowing that they were false.”

62. The whole of the evidence rebuts this submission.  This was an orchestrated fraud.  There were of necessity many parts to it.  The Bought or Sold notes were but the initial means by which it commenced.  Had there been unauthorized trading other than by the applicant, it would have been discovered immediately.  The unauthorized trading was not discovered until much later and the reason it was not discovered was because the applicant was in the unique position to conceal it.  It has never been suggested nor does the evidence admit of a conclusion that there was anyone else in such a position.

63. There was no substance in this ground of appeal. 

64. Grounds 3 to 5 can properly be taken together, the thrust of which is that the judge was in error when he concluded that it was the applicant who had created and submitted to EAA the three Demand Notes for Repayment the subject matter of charges 23-25.

65. This was an inference drawn by the judge.  It is said that it was not the only reasonable inference and therefore he was in error.

66. The submissions ignore the fact that the applicant had been at a series of meetings with the management of EAA where the primary subject of discussion was the status of those accounts with negative balances.  It ignores the fact that the applicant was actively involved in the decision not to take immediate action to recover the outstanding indebtedness and was integrally involved in the decision made that the clients whose accounts were in debit were to be approached by their account executive and requested to acknowledge that fact and to propose a repayment plan.  It also ignores the fact that the conclusion that the applicant “arranged for these documents to be drawn up and submitted to EAA” was irresistible once it was determined that the applicant had been conducting unauthorized trading using these accounts.

67. The management of EAA were concerned about the errant nature of the trading in those accounts.  They had substantial and apparently unsecured negative balances.  The management proposed to take action against the account holders to recover the accumulated debt.  They were persuaded not to by the production of those documents.

68. Whilst it is correct to say that there was no direct evidence to prove that the applicant had physically produced the Demand Notes For Repayment to the management of EAA, this was an irresistible inference to be drawn, and was properly drawn, by the judge.  There can be no doubt that once it was established that the applicant had been conducting unauthorized trading in these accounts then it was an irresistible inference that she prepared and submitted those three documents to EAA.  There was no substance in these grounds of appeal.

Material irregularity

69. Ground 6 of the perfected grounds of appeal alleges that there were material irregularities in the trial.  For example, it was submitted by Mr Hoosen that it was a material irregularity in the trial for the prosecutor to open his case on the basis that there were “huge negative balances” in some of the clients’ accounts at EAA which led to a series of meetings in late 2000 and early 2001.  It is said that because the unauthorized trading alleged in the clients’ accounts did not commence until after these negative balances had been discovered, this evidence was highly prejudicial inasmuch as it suggested by inference that there was earlier unauthorized trading by the applicant which was not the subject of the charges she faced.

70. As Mr Chapman points out in his written submissions, the fact that there were negative balances in a number of clients’ accounts at EAA and that these had been discovered as early as 1997 was all part of the background to the events which led to the creation of the false instruments which formed that basis of charges 23–25.  It is apparent from the Reasons for Verdict that the Judge did not assume, that the applicant was responsible for these earlier negative balances.  There was no prejudice to the applicant.  This was no more than the background to the charges that the applicant faced.

71. It suffices to say that none of the particulars of material irregularities alleged are irregularities let alone material irregularities.  None of the grounds of appeal advanced on behalf of the applicant had any merit : leave to appeal was refused and the application dismissed.

Sentence

72. The applicant was convicted after trial of 18 counts of false accounting and three counts of using a false instrument. 

73. During the period between August 2000 and June 2001, in her capacity as a dealer, the applicant had traded in six of her clients’ accounts without their authorization.  Most of those transactions ended up incurring losses.

74. The exact loss to EAA was not significant.  It was $12-14,000.      However, the total volume of unauthorized trading was in the region of $4 million. 

75. The Judge noted that the applicant’s conduct had the effect of bringing the Hong Kong Stock Market into disrepute.  The Judge believed that it was important to send out a clear message that conduct such as the applicant’s would not be tolerated and that a deterrent sentence was called for. 

76. He then adopted 5 years as a starting point for sentence on each charge.

77. On behalf of the applicant, Mr Hoosen submitted that the starting point in the case of each of the charges was manifestly excessive.  He emphasized that whilst the volume of the unauthorized trading was in excess of $4 million, the actual loss was relatively small.  He acknowledged that this was a significant breach of trust but submitted that a total sentence of 5 years was out of all proportion to the actual criminality. 

78. We do not agree.  This was a case where there was a very serious breach of trust.  Not only did the applicant breach the trust given her by her employer but she also breached the trust of each of her clients.

79. In the circumstances the sentences passed on each charge were entirely appropriate as was the judge's decision to order that they all be concurrent.

80. The application for leave to appeal sentence was without merit.  Leave to appeal is refused and the application dismissed.