HONG KONG (Dow Jones)--The Securities and Futures Commission is investigating possible insider trading in shares of mobile service provider Sunday Communications Ltd. (SDAY) before a takeover announcement, a regulatory source said Tuesday.
The same source said the SFC is also investigating PCCW Ltd. (PCW) Chairman Richard Li's purchase of shares in the fixed-line operator.
The SFC declined to comment, but the regulatory source said the SFC's probe into Sunday was prompted by a surge in its share price and turnover Friday.
Trading in the stock was suspended Monday, just before the announcement of fixed-line giant's PCCW's plan to acquire a controlling stake in the mobile operator.
Sunday shares rose 10% to HK$0.53 Friday on volume of 39.3 million shares, compared with 5.2 million shares Thursday.
"The SFC thinks it has a prima facie case for insider dealing," the source said.
He added that the SFC was also looking into Li's accumulation of PCCW shares prior to the announcement of the Sunday takeover.
Neither PCCW nor Sunday were immediately available for comment.
According to a disclosure to the Hong Kong stock exchange, Li raised his stake in PCCW in 11 transactions since April 6, involving a total amount of HK$138 million. In all, he raised his stake to 26.56% from 26.11%, paying between between HK$4.45 and HK$4.80 each for PCCW shares.
On June 6 and June 7, a week before the Sunday acquisition was announced, Li bought 7.69 million PCCW shares for HK$37 million.
PCCW said Monday it would pay HK$1.16 billion in cash to acquire a 60% stake in Sunday, re-entering the crowded cellular market it exited three years ago.
The company will pay Sunday HK$0.65 a share.
Sunday shares resumed trading Tuesday. At 0410 GMT, they were up 19% at HK$0.63.
PCCW shares were down 1.0% at HK$4.75.
-By Nisha Gopalan, Dow Jones Newswires; 852-2832-2343; nisha.gopalan@dowjones.com and Chan Ka Sing; 852-2832-2342; ks.chan@dowjones.com
-Edited by Sharon Buan
(END) Dow Jones Newswires"
Posted to the site on 14th June 2005
Posted to: www.cellular-news.com/story/13149.php