The Hong Kong Securities Regulatory Commission commences investigation proceedings against Dickson Founding (00113) Chairman Pan Dickson and Equity on suspicion of insider trading

Zhitong Finance App has learned that the Hong Kong Securities Regulatory Commission has initiated investigation proceedings against Chairman Pan Dickson (male) of Dickson Creation (International) Limited (Dickson Creation) (00113) and Equity Advantage Limited (Equity) in the Market Misconduct Tribunal because they are suspected of insider trading in shares founded by Dickson. According to the Securities Regulatory Commission, Pan Dickson purchased a total of 2,756,500 shares of Dickson's founding shares through the Equity securities account between November 28 and December 19, 2019, when he had insider information on the proposed acquisition project.

The Securities Regulatory Commission also alleges that Pan Dickson and his son Pan Guanda (executive director founded by Dickson) caused the company to violate insider information disclosure regulations, causing it to delay disclosure for seven weeks.

On November 20, 2019, Paypal Holdings, Inc. (Paypal) announced on its website that it has agreed to acquire Honey Science Corporation (Honey) for approximately US$4 billion (proposed acquisition). At the critical time, Dickson Foundations held 24,834,600 shares of Honey, accounting for approximately 3.73% of Honey's issued share capital (this investment). In the financial statements prepared by Dickson, the investment was recorded as an “unlisted equity security” under “other financial assets”, but there was no mention of Honey.

On January 9, 2020, Dickson Foundation issued an announcement disclosing to the public (among others) that Paypal and Honey had completed the proposed acquisition project on January 3, 2020. As a result, Dickson Creation will collect US$147,585,708 (or approximately HK$1,149,545,080) in cash as proceeds from the sale of the investment, and compared to the net book value of the investment by Dickson Creation as of September 30, 2019, it will profit approximately HK$928,744,921. On January 10, 2020, the stock price created by Dickson rose to a single-day high of HK$5.52 per share, closing at HK$5.00 per share, up 33.3% from the closing price before the suspension of trading.

The Securities Regulatory Commission also alleges that Dickson Foundations did not disclose insider information on the proposed acquisition project as soon as is reasonably practicable; Pan Dickson and Pan Guanda caused Dickson to violate insider information disclosure regulations, and they have not taken any reasonable measures to ensure proper precautions are in place to prevent violation of this provision.

According to the Securities Regulatory Commission, Pan Dickson and Pan Guanda are the same senior management members who founded Dickson and learned insider information about the proposed acquisition as early as November 21, 2019. However, they did not take action to get the board of directors created by Dickson to disclose this insider information to the public as soon as is reasonably practicable, and Dickson was founded until seven weeks later to issue an announcement on January 9, 2020.