Alleged Stock Price Manipulation to Meet Main Board Transfer Market Capitalization Threshold: Hong Kong SFC Initiates Market Misconduct Proceedings Against Parties Related to TASTEGOURMET GP (08371)

The SFC has instituted proceedings before the Market Misconduct Tribunal (MMT) against three senior executives of TASTEGOURMET GP (08371), and five of their relatives, employees and close associates, over an alleged scheme to manipulate the companys share price to support its plan to transfer its listing from GEM to the Main Board of The Stock Exchange of Hong Kong Limited (SEHK). The three senior executives of Taste Gourmet in respect of whom the SFC has taken action are: Wong Ngai Shan, Chairman and co-founder; Chan Wai Chun, Chief Executive Officer and co-founder; and Yu Mang To, then Chief Financial Officer. The five relatives, employees and close associates of Wong, Chan and Yu involved in the same SFC action are: Chan Suet Yi, Wong Ngai Ming, Wong Yat Chun, Wong Ka Ying and Chan Man (together, the five other persons). The SFC alleges that, between 1 June 2020 and 18 September 2020 (the relevant period), Wong, Chan and Yu directed or coordinated the five other persons to conduct trades. The five other persons allegedly bought and sold Taste Gourmet shares, whether on their own account or through others, to artificially push up and maintain the companys share price at around HK$1.32. This was because, based on the number of issued shares at the time, Taste Gourmets share price needed to be at least HK$1.32 for the company to meet the minimum market capitalisation requirement of HK$500 million for a transfer to the Main Board. During the relevant period, Taste Gourmets share price surged 86% from HK$0.73 to HK$1.36. The SFC alleges that the trading in the companys shares exhibited characteristics of share price manipulation, including aggressive buy orders placed near the close of trading, and orders capable of pushing or determining the closing price. On six trading days during the relevant period, such trading accounted for all of the days trading in the companys shares. The SFC further alleges that communications between Wong, Chan and Yu and the five other persons included discussions of the target share price, and when and how buy and sell orders should be placed. The alleged scheme also involved coordination of substantial fund transfers, which were used shortly after transfer to purchase Taste Gourmet shares. Taste Gourmets share price first closed above HK$1.32 on 27 July 2020. The company announced on 5 August 2020 that it had formally submitted an application for transfer to the Main Board, and its shares closed at HK$1.35 that day. Ultimately, the transfer to the Main Board did not proceed as originally planned. The MMT will determine, based on the above allegations made by the SFC in its proceedings, whether any market misconduct has taken place, and the identity of any person who has engaged in the alleged misconduct.