Litigation Release No. 16220 / July 26, 1999
SECURITIES AND EXCHANGE COMMISSION v. SAMSON HUI AND RICH LEADER ENTERPRISES LIMITED, Civil Action No. 99 Civ. 5863 (S.D.N.Y.) (filed July 26, 1999)
SEC SUES HONG KONG RESIDENT AND HIS COMPANY
FOR INSIDER TRADING IN OMNIPOINT AND
DEFENDANTS SETTLE BY PAYING OVER $2 MILLION
On July 26, 1999, the Commission filed a civil complaint in the United States District Court for the Southern District of New York against Hong Kong resident Samson Hui and a company of which he is part owner, Rich Leader Enterprises Limited, in connection with their purchases five weeks ago, on June 21 and 22, 1999, of common stock of Omnipoint Corporation, a Bethesda, Maryland based company specializing in telecommunications. The complaint alleges that the defendants engaged in insider trading prior to the June 23, 1999 public announcement that Omnipoint would be acquired by VoiceStream Wireless Corporation, another telecommunications firm, and that VoiceStream's controlling shareholder, Hutchison Telecommunications PCS (USA) Limited, has committed to invest $957 million into the new combined entity. Hutchison Telecommunications PCS (USA) Limited is an indirect subsidiary of Hutchison Whampoa, a Hong Kong conglomerate. The complaint alleges that the defendants violated Section 10(b)of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The complaint alleges that on Monday, June 21, 1999, and Tuesday, June 22, 1999, immediately preceding the public announcement of the acquisition, the defendants, in a series of transactions and through two brokerage accounts, accumulated 121,000 shares of the common stock of Omnipoint Corporation. The per share cost ranged from $19-1/8 to $21-5/8. Immediately after Omnipoint and VoiceStream's June 23 announcement that Omnipoint would be merged into VoiceStream, Omnipoint's stock rose to $29 per share.
Simultaneously with the filing of the complaint, the defendants agreed to settle the civil action by consenting, without admitting or denying the allegations in the complaint, to the entry of an order permanently enjoining them from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, requiring them to disgorge $1,020,462.50 in trading profits, plus prejudgment interest, and requiring them to pay a penalty of $1,020,462.50 under the Insider Trading and Securities Fraud Enforcement Act.
The Commission wishes to acknowledge the assistance of the Hong Kong Securities and Futures Commission. The Commission's investigation is continuing.