15 Arrested on Next Digital Stock Trades

Police allege 15 people defrauded and money laundered in Next Digital shares

Yesterday the Hong Kong Police publicized its arrest of 15 people on suspicion of conspiracy to defraud and money laundering by manipulating shares of Next Digital, and that they earned HK$38.7 million.

The stock price of Next Digital, the parent company that owns Apple Daily shot up for three days after its founder Jimmy Lai Chee-ying was detained by police under the national security law.

One of the 15 people arrested yesterday

Interestingly it was the Narcotics Bureau's financial investigations division that made the arrests yesterday, including one jobless suspect who allegedly earned HK$25 million, and four others earned HK$1 million each.

Before Lai was arrested the stock was trading at HK$0.075 a share, and then surged to a high of HK$1.96 on August 10 and then fell to HK$0.65 on August 12.

While the police have seized computers, phones and bank documents, as well as froze assets of up to HK$30 million, a lawyer specializing in financial regulation said it really should be the stock market watchdog, the Securities and Futures Commission who should be in charge of investigating the case.

Local media asked the SFC to confirm, but instead today it released a statement saying it would cooperate with the police.

The SFC said it will cooperate with police

In it the SFC said in part:

Investigation into market misconduct offenses, such as false trading, often involves complex questions of law and evidence as well as the need for expert evaluation in relation to securities market functioning, trading methods and investor behaviour. The SFC is ready to respond to any requests made by the Police under the MOU for this type of assistance in relation to any potential offenses under the SFO.

If the SFC had thought there was illegal trading going on, it would have already investigated. Now the police think they have a case on their hands... but do they understand the complexity of financial trading and such?

The police claim the 14 men and one woman made 13,200 transactions involving 1.69 billion shares. The force alleges the accused created hype on social media about the stock to show increasing activity, thus luring others to invest in Next Digital.

Shares in Next Digital shot up for three days after Lai's arrest

Barrister Albert Luk Wai-hung said making such calls on social media did not constitute a crime. What mattered most was if anyone did so with the intention of manipulating the stock price and profiting from it.

While financial regulation lawyer Kevin Yam Kin-fung agreed with Luk regarding social media posts, he said the investigation was justified, giving the number of trades involved.

It will be revealed soon whether the police were correct in arresting these people, or realize the complexity of the stock trades are hard to prove what they did was a criminal act.

And for those who are wondering, Next Digital closed today for the week at HK$0.33.

The Sad Demise of Print

Eat and Travel Weekly ends publication on August 3

Eat and Travel Weekly used to be the bible to pick up if you wanted an authoritative guide to the restaurant scene in Hong Kong. It featured the newest restaurants, reviews, the best of the best, as well as travel tips for destinations around the world.

One former editor told me that working there would ruin your digestive system because when they tried to find the best char siu or the best mooncake for example, they definitely tried a lot of them -- in one go.

An article testing out different Mont Blanc cakes in town

Samples from 50 or even 100 establishments would be couriered to the office, where someone was delegated to label each one from one to 50 or one to 100 so that they could be tasted blindly.

And yes, they would try each one to try to determine which one deserved the gold standard.

However, in the last few years, the economy has taken a big hit especially in print media, and advertising plunged, forcing the magazine, owned by Next Media (now Next Digital), to be downsized and folded into Next Magazine in 2015.

But a few days ago it was announced the popular magazine would have its last print run on August 3, and from then onwards will be digital only with a website and mobile app presence.

The announcement comes after the trouble publishing company owned by Jimmy Lai Chi-ying sold several magazines to businessman Kenny Wee Ho for HK$500 million, but Eat and Travel Weekly was not included in the deal.

A story about different styles of izakaya in Hong Kong

"Owing to the decline of print media, it is with regret that we are announcing the end of our print edition... although the room for survival in print media is shrinking, we will carry on with our professional spirit and continue to shine on the digital platform," said a statement on the magazine's Facebook page.

"Lastly, we would like to express gratitude to our readers for their support over the past 20 years."

It's sad news when such a popular publication ceases to put out a print version -- if Eat and Travel Weekly can't survive, what hope is there for the rest of Hong Kong's magazines?

This is the death knell for print publications in Hong Kong -- that the shift to digital is moving really fast, as everyone checks their smartphones for the latest news, than deliberately go to the newsstands to get a magazine.

Which publication will die next? Stay tuned.

Mysterious Force Derails Chow's Legco Run

Ken Chow claims forces beyond Hong Kong's jurisdiction threatened him

Things are getting murkier in the case of Liberal Party candidate Ken Chow Wing-kan, who dropped out of the Legislative Council race, claiming he feared threats from a source "outside Hong Kong" that was more powerful than Beijing's Liaison Office or the triads.

That certainly raised eyebrows.

In an interview with Next Magazine, Chow said there was no way local authorities could look into the matter because "The power does not come from Hong Kong. How can they investigate. It's beyond their jurisdiction".

However, Chow, who was running for New Territories West, refused to divulge who made the threats against him.

"I can only say it's a very powerful force. The pressure [I face] is far greater than any individual or political party [can impose]," he said.

Chow dropped out last Thursday during a televised debate, saying he did not want those close to him get into "high level troubles".

Junius Ho denies knowledge of threats made by his volunteer

The Independent Commission Against Corruption has launched an investigation following complaints filed by several political parties.

After the televised debate, Chow released a recording from a volunteer who worked for pro-Beijing candidate Junius Ho Kwan-yiu.

In it, a man's voice can be heard suggesting mobilizing several dozen people to "chase after" Chow before the election forum. Ho has denied any knowledge of this plan or recording.

During the Next Magazine interview, Chow denied his withdrawal had to do with the recording.

"The political climate in Hong Kong right now is very scary. This could be the last election where there are choices," he said.

He was asked if he was worried about being disappeared, and Chow replied that is why he went to the UK and not Thailand, Myanmar or China.

Chow said he would return to Hong Kong after the election and would say more if people were interested.

Of course we are!

The booksellers' saga adds more fears about people's rights

It will be interesting to see if some people do vote for Chow on Sunday, as he cannot withdraw his candidacy after it has been approved. His own party doesn't even know what happened.

We had the incident of the missing Hong Kong booksellers being intimidated, and now a political candidate fears running because of some strong forces that seem to threaten him and anyone close to him.

Chow is not a separatist or a localist.

What is going on?

But we probably won't know until after September 4. This year's race is definitely a bizarre one and we hope it's not a sign of things to come.

If anything, this incident should encourage the public to get out and exercise their right to vote without fear.

Keeping the Momentum Going?

Jimmy Lai talks to the media after his visit to police headquarters

Today there was an advertisement in the Asia edition of the Wall Street Journal where a group of pro-democracy financiers in Hong Kong listed "10 requests" to the Chinese Communist Party.

These include asking Beijing to "refrain from interfering in the administrative affairs of Hong Kong" and to "establish a system of genuine universal suffrage" as well as defend the city's freedoms.

"Three years ago, I was just like any other trader in Hong Kong. I didn't care about politics... but things have changed so much it is important for finance people to speak up and to stand together to fight for true democracy," said hedge fund manager Edward Chin of HK Finance Monitor 2047, which took out the ad.

He added the letter outlining the 10 points would be given to Chinese President Xi Jinping.

The pro-democracy campaign group consists of 70 finance workers, and had previously supported the Occupy Central movement.

"The economy is being hindered by the lack of democracy here," said corporate governance activist David Webb, who is also part of the campaign group.

"Hong Kong has to start looking at whether we're going to... preserve the current systems that we have, or whether we are now on the slippery slope of erosion and assimilation and absorption into the mainland system."

It's curious to see people in finance take out an ad like this -- don't they just care about making money?

In the meantime it's hard to tell what their real motive may be. Some critics think these so-called campaigners give the impression they are supporting the pro-democracy movement, but in fact hope this will benefit their balance sheets, while others say Hong Kong was previously under colonial rule -- didn't they also make money then?

For now we look at this as another form of support for the Umbrella Movement -- though it seems to be slowly being dismantled by the authorities with the leaders being called into the police station.

Upon their request, Next Media founder Jimmy Lai Chee-ying visited the Wan Chai police headquarters yesterday and he was very forward in asking the police to charge him immediately.

However Lai later reported the authorities refused his request, "but they said they had the right to ask me to report back any time", he said.

Sounds like they are trying to use any opportunity to exercise their powers -- the point of almost abusing them, like they did with "chalk girl", a 14-year-old who was arrested for drawing pictures with chalk on the former Lennon Wall in Admiralty and was separated from her family.

Seems as if both sides are testing the "rule of law" which will be a healthy exercise. However, it would be in the best interests of the police not to overstep their boundaries too much, as they need to rebuild their reputation after their heavy-handed approach to protesters during the Umbrella Movement...

Attacking HK's Press Freedom

A man with a firebomb about to attack Jimmy Lai's home in Ho Man Tin

It's strange that even though the Occupy/Umbrella Movement is over, and Next Media Founder Jimmy Lai Chee-ying has been asked to report to the police next week, that his home and head office would be attacked with firebombs in the early hours of Monday morning.

They were coordinated attacks because the first one happened at about 1.45am Monday when a man wearing a surgical mask and hood threw a Molotov cocktail at the front gate of Lai's home on Kadoorie Avenue in Ho Man Tin. He then fled in a seven-seat car driven by another person.

A security guard put out the fire and called police; Lai was at home at the time.

Then five minutes later there was another firebomb hurled from another car at the gate of Next Media's headquarters on Chun Ying Street in Tseung Kwan O. The car was driven to another entrance and another Molotov cocktail was thrown.

Again security guards put out the flames and called the authorities.

The two cars were later found torched on Tai Woh Ping Road in Shek Kip Mei, and Sham Mong Road in Cheung Sha Wan before 2.30pm. In one report the license plates of the two cars were removed...

Lai was at the Admiralty protest site practically everyday

Police said that while no one was injured in the attacks, they are looking for possible motives. "The attacks were calculated," a police source said. "We believe it was designed to send a warning rather than an attempt to harm anyone."

Meanwhile the pan-democrats condemned the attacks, saying it was an attempt to silence the media and create "white terror".

Democratic Party chairwoman Emily Lau Wai-hing said the police must do its utmost to solve all cases of violence against media workers, or the city would become "lawless".

"Most of the cases [of violence against the press] were not solved. This is just like sending a message, 'You can go hit them because there will be no consequences'. This is lawless."

Lai has experienced attacks before -- most recently during the Umbrella Movement when someone threw offal at his face at the protest site in Admiralty in November.

And in June 2013, someone rammed a stolen car into the front gate of his home and then an axe and a machete were placed on the driveway before the perpetrator(s) fled the scene.

What Lai and Next Media represent is freedom of the press -- since many of the big advertisers will not buy ads in his stable of publications, what he publishes in print and online are pretty pure in terms of free speech and media.

For someone to send a warning now doesn't make much sense particularly since Lai has formally stepped down as editor-in-chief to apparently spend more time with his family, unless there's another angle to this story we are not aware of.

But Lau is right. The police really need to get to the bottom of this incident and any others involving journalists. Our freedoms in Hong Kong are quietly crumbling, and while we made of show of this during the Umbrella Movement, we still need to do whatever we can to keep propping them up...

Paying the Price for Taking a Stand

Next Media's Jimmy Lai seems to know what he's up against

A witch hunt is under way with the Independent Commission Against Corruption raiding the home of Jimmy Lai Chee-ying, Next Media's chief, who is a China critic and has funded pro-democracy activities and politicians.

They arrived around 7am to his Kowloon Tong home, and the ICAC also searched the homes of Lai's assistant Mark Simon, and Labour Party legislator Lee Cheuk-yan, who admitted receiving HK$1.5 million from Lai.

Lai told Next Media management he was prepared for the raid. "There's a price to pay for taking a stand," he said.

Lee said anti-graft officers took bank statements from his home, while Simon reported five officers searched his home.

"The timing is not uncoincidental," he said. "If you wanted to cool things down, this is the last thing you would do."

An ICAC spokesman said it began its investigation after receiving corruption complaints accusing certain lawmakers of accepting advantages in breach of the Prevention of Bribery Ordinance.

He added the agency acted impartially and without any political consideration.

Last month it was revealed that in leaked records Lai had donated millions of dollars to pan-democrats. Five pan-democratic lawmakers including Lee were accused of failing to declare the donations in the legislature.

Lee said the ICAC wanted to investigate the relationship between Lai's donations and a Legco debate on January 21 about editorial independence.

It was then that Lee mentioned reports that Standard Chartered Bank had pulled ads from local newspapers -- not mentioning Apple Daily by name -- apparently due to pressure from Chief Executive Leung Chun-ying, according to minutes of the meeting.

Another pro-democracy website called House News which was shut down in July, reported in January that Leung and his allies had pressed banks, including Standard Chartered, to pull ads from Apple Daily.

However, former ICAC chief investigator Stephen Char Shik-ngor, now a barrister, doubted if a "valid or logical" case could be made over any link to Lee's speech.

While the lawmakers may be technically faulted for not declaring Lai's donations, what is wrong with him doing that?

What about investigating the anti-Occupy Central movement? Where did they get all their funds to hold such a long signature campaign and two weekends ago be able to shut off the streets from Victoria Park to Chater Garden for the entire Sunday?

Oh yes -- and how much money was spent luring participants to join the anti-Occupy Central march because they got free meals and some received HK$300 in cash...

Sounds like something fishy is going on -- particularly on the eve of Occupy Central kicking off...