Eighteen persons arrested for securities fraud

Police arrested 18 persons in different locations in the territory today (March 29) in connection with several fraud cases relating to the new applications of the Initial Public Offer (IPO) exercises.

A complainant made a report to the Police in January this year saying that she found her identity card number was on the list of successful applicants for an IPO exercise on the Hong Kong Stock Exchange website. However, she did not receive any share certificate but received a refund cheque instead.

Investigations by Commercial Crime Bureau (CCB) revealed that someone used the complainant's identity card number with a different name and address to apply for new shares in an IPO exercise. Subsequent enquiries showed that the identity card number was used in a total of seven IPO exercises for application of new shares between October and December 2006.

After in-depth investigations, officers of CCB mounted an operation today and 18 persons, including ten men and eight women aged between 20 and 60, were arrested in suspected connection with the fraud cases.

The modus operandi of the fraud cases was that the culprits made a number of applications in each IPO exercise using their own names but similar identity card numbers with different addresses and occupations. The identity card numbers they used were fairly similar to their own numbers in all cases with only the 4th and 5th digits different.

It is believed that if the culprits failed to apply for the new shares, they could still get the refund successfully as the cheques for refund only bore the identity card numbers of unsuccessful applicants with the 4th and 5th digits substituted with asterisks to protect personal data.

On the other hand, if they were successfully allotted with shares, they could gain profits by selling the shares at anytime when the shares' prices surged.

Investigations by CCB are still continuing. All the 18 arrestees are still being detained for enquiries.


Add Police Report No. 4

Issued by PPRB

End/Thursday, March 29, 2007