Finance Journalism (III): Ethical and legal considerations for journalists Stanley Ma 7 May 2009...

Finance Journalism (III): Finance Journalism (III):

Ethical and legal Ethical and legal considerations for journalists considerations for journalists

Stanley MaStanley Ma

7 May 20097 May 2009

Total =48 1Seminar 10-2009

OverviewOverview

Insider dealing and journalistsInsider dealing and journalists Duty of disclosure by financial Duty of disclosure by financial

commentatorscommentators An overview of corporate An overview of corporate

winding-up (winding-up ( 公司清盤公司清盤 )) Introduction to interviewing Introduction to interviewing

techniquetechnique


A trap for finance reportersA trap for finance reporters

Total =48 4

interview

Sensitive infoabout stock price

Friends/family

Mr. directorMiss Reporter

Sensitive info about stock price

Buy/sell ?

Buy/sell ?Seminar 10-2009

S.270(1)(a) & (c) S.270(1)(a) & (c) Link

A A connected personconnected person ( ( 關連人士關連人士 )) having having relevant informationrelevant information ( ( 有關消有關消息息 ) either ) either deals (deals ( 處理處理 )) in the listed securities (in the listed securities ( 上市上市

證劵證劵 ) or derivatives () or derivatives ( 衍生工具衍生工具 ) of a ) of a company and or company and or

counsels/procurescounsels/procures (( 慫恿慫恿 ) ) another to another to deal, or deal, or

discloses (discloses ( 披露披露 )) relevant informationrelevant information ( ( 有有關消息關消息 )knowing)knowing (( 而明知而明知 ), or having ), or having reasonable cause to believereasonable cause to believe (( 合理理由相合理理由相信信 ), that the recipient (), that the recipient ( 接收消息人接收消息人 )would )would dealdealTotal =48 5Seminar 10-2009

http://www.hklii.hk/hk/legis/en/ord/571/s270.html

S.270(1)(b) & (d) S.270(1)(b) & (d) Link A person who is contemplating A person who is contemplating

a take-over (a take-over ( 提出收購提出收購 )) or no or no longer contemplating a take-longer contemplating a take-overover (( 取消收購取消收購 ), either ), either

deals in the listed securities or deals in the listed securities or derivatives; or derivatives; or

counsels/procures another to deal; counsels/procures another to deal; or or

discloses information knowing, or discloses information knowing, or having reasonable cause to believe, having reasonable cause to believe, that the person recipient would dealthat the person recipient would dealTotal =48 6Seminar 10-2009


S.270(1)(e) & (f)S.270(1)(e) & (f)

A person who has received A person who has received relevant informationrelevant information from a from a connected personconnected person or person who is or person who is contemplating a take-over either contemplating a take-over either

deals in the listed securities or deals in the listed securities or counsels/procures another person counsels/procures another person

to deal in the listed securitiesto deal in the listed securities


Relevant Info (Relevant Info ( 有關消息有關消息 )) (s.245) (s.245) Link



Connected person Connected person (( 關連人士關連人士 ) (s.247) ) (s.247) Link



Two or more companies are regarded as Two or more companies are regarded as related if one of them is the holding related if one of them is the holding company of the othercompany of the other

Exco and Legco members (s.248)Exco and Legco members (s.248) Officers and employees of the SEHK Officers and employees of the SEHK

(s.248)(s.248) Officers and employees of public Officers and employees of public

corporations (s.248)corporations (s.248)


Civil and Criminal LiabCivil and Criminal Liab

Subject to civil remediesSubject to civil remedies SFC will refer civil cases to the Financial SFC will refer civil cases to the Financial

Secretary who will decide whether or not civil Secretary who will decide whether or not civil proceedings shall be instituted by the proceedings shall be instituted by the Market Market Misconduct Tribunal Misconduct Tribunal 市場失當審裁處市場失當審裁處

Punishable as a criminal offencePunishable as a criminal offence SFC will refer criminal cases SFC will refer criminal cases Secretary for Secretary for

Justice who will decide whether or not criminal Justice who will decide whether or not criminal prosecution should be brought prosecution should be brought

Trial venue: magistrate’s court, District Ct, or Trial venue: magistrate’s court, District Ct, or High Ct.High Ct.


Double jeopardyDouble jeopardy S.283 provides that there will not be S.283 provides that there will not be

double jeopardy in that double jeopardy in that a person will not a person will not subject to both criminal prosecution and subject to both criminal prosecution and civil proceedings for the same conductcivil proceedings for the same conduct


Market Misconduct TribunalMarket Misconduct Tribunal

Objective (s.252)Objective (s.252) Whether insider dealingWhether insider dealing The identity of person involvedThe identity of person involved The amount of any profit gained or The amount of any profit gained or

loss avoidedloss avoided Wide jurisdiction (ss.253-254)Wide jurisdiction (ss.253-254)

Disqualification order Disqualification order Prohibition order Prohibition order Costs Costs


Criminal liability under s.291(1) Criminal liability under s.291(1) Link

A person connected with a listed A person connected with a listed company and having info which he company and having info which he knows is relevant info in relation to knows is relevant info in relation to the company is prohibited fromthe company is prohibited from Dealing in the company’s securities or Dealing in the company’s securities or

derivatives (or dealing in its related derivatives (or dealing in its related company’s securities or derivates)company’s securities or derivates)

Counselling or procuring another person Counselling or procuring another person to deal in such securities or derivates, to deal in such securities or derivates, knowing or having reasonable cause to knowing or having reasonable cause to believe that the other person will deal in believe that the other person will deal in themthemTotal =48 14Seminar 10-2009


Criminal liability under s.291(2)Criminal liability under s.291(2)

A person who is contemplating A person who is contemplating making a take-over offer for a listed making a take-over offer for a listed co and knows the info that the offer co and knows the info that the offer is contemplated is relevant info in is contemplated is relevant info in relation to the company is also relation to the company is also prohibited from dealing or prohibited from dealing or counselling/procuring another counselling/procuring another person to deal with the company’s person to deal with the company’s securities or derivativessecurities or derivatives


s.291(3) & (4)s.291(3) & (4)

A connected person who knows that A connected person who knows that any info is relevant info, and any info is relevant info, and

A person contemplating a take-over A person contemplating a take-over who knows that that info is relevantwho knows that that info is relevant

Also prohibited from disclosing the Also prohibited from disclosing the info, knowing or believing that the info, knowing or believing that the other person will deal or counsel or other person will deal or counsel or procure another to dealprocure another to deal


The person who receives such info is The person who receives such info is also prohibited from either dealing or also prohibited from either dealing or counselling or procuring another counselling or procuring another person to dealperson to deal

Both the informer (the tipper) and Both the informer (the tipper) and the person who receive that info (the the person who receive that info (the tipee) may be criminally liable for tipee) may be criminally liable for insider dealinginsider dealing


Penalty against insider dealingPenalty against insider dealing

Conviction on indictmentConviction on indictment A fine of $10m and 10 yrs’ A fine of $10m and 10 yrs’

imprisonmentimprisonment

Summary convictionSummary conviction A fine of $1m and 3 years’ A fine of $1m and 3 years’

imprisonmentimprisonment


INTERVIEW WITH INTERVIEW WITH FINANCIAL ANALYSTSFINANCIAL ANALYSTS


《《證券及期貨事務監察委員會持牌人或註冊人操證券及期貨事務監察委員會持牌人或註冊人操守準則守準則》》

Code of ConductCode of Conduct

for Persons Registered with the Securitiesfor Persons Registered with the Securities

and Futures Commissionand Futures Commission


Application Application

an analyst an analyst 分析員分析員 ;; any individual within a firm who any individual within a firm who

prepares and/or publishes investment prepares and/or publishes investment research or the substance of investment research or the substance of investment research.research.

a firm that employs any analyst; a firm that employs any analyst; andand

a firm that issues any a firm that issues any investment research.investment research.


Par. 16.9 Making commentaries or Par. 16.9 Making commentaries or recommendations through the mass mediarecommendations through the mass media

When an analyst makes When an analyst makes commentaries or commentaries or recommendations through the recommendations through the mass media, he should disclose mass media, he should disclose the followingsthe followings


Analysts appearing in personal Analysts appearing in personal capacity in the mass mediacapacity in the mass media (i) his name;(i) his name; (ii) his licence status; and(ii) his licence status; and (iii) where he and/or his associate (iii) where he and/or his associate

has a financial interest in the listed has a financial interest in the listed corporation, the fact of having corporation, the fact of having such an interest.such an interest.

eg., whether he holds any eg., whether he holds any shares of the securities shares of the securities commentedcommentedTotal =48 23Seminar 10-2009

Analysts responding in personal Analysts responding in personal capacity to queries from capacity to queries from audiences and journalistsaudiences and journalists(i) his name;(i) his name;

(ii) his licence status; and(ii) his licence status; and(iii) where he and/or his associate has a (iii) where he and/or his associate has a financial interest in the listed corporation, financial interest in the listed corporation, the fact of having such an interest the fact of having such an interest ((whether he and/or his associates have whether he and/or his associates have traded in the relevant securities during the traded in the relevant securities during the 30 days prior to giving such analyses or 30 days prior to giving such analyses or commentscomments))Total =48 24Seminar 10-2009

Para. 16.10 Disclosure ResponsibilityPara. 16.10 Disclosure Responsibility

Where relevant disclosures have Where relevant disclosures have been made by analysts and/or been made by analysts and/or firms, they will not be held firms, they will not be held responsible if their investment responsible if their investment research, or recommendation is research, or recommendation is published or otherwise published or otherwise reproduced in whole or in part reproduced in whole or in part by the mass media without the by the mass media without the relevant disclosures.relevant disclosures.


FOR FURTHER DETAILSFOR FURTHER DETAILS

http://www.sfc.hk/sfcRegulatoryHandbook/EN/displayFileServlet?docno=H459




COMPULSORY WINDING COMPULSORY WINDING UPUP


Compulsory winding-upCompulsory winding-up

Where a company owes debt of Where a company owes debt of more than HK$10,000 and fails more than HK$10,000 and fails to pay the same to its creditorsto pay the same to its creditors

Where a company fails to pay to Where a company fails to pay to its judgment creditorits judgment creditor

Where a company appears to be Where a company appears to be insolventinsolvent Liabilities > assetsLiabilities > assets


Procedure Procedure

Creditor (Petitioner)Creditor (Petitioner) Court of First Instance, High Ct.Court of First Instance, High Ct. File a winding-up petition (File a winding-up petition ( 清盤清盤

呈請書呈請書 )) Court hearingCourt hearing

Winding-up order (Winding-up order ( 清盤令清盤令 )) Appointment of provisional Appointment of provisional

liquidator (liquidator ( 臨時清盤人臨時清盤人 )) Accountant firm / Official RecieverAccountant firm / Official Reciever


The functions of LiquidatorThe functions of Liquidator Proof of debt from other creditorsProof of debt from other creditors Asset tracing (Asset tracing ( 資產追索資產追索 ))

The transactions would be voidThe transactions would be void If it was made to an associate person If it was made to an associate person

within 6 months before commencement within 6 months before commencement of winding-upof winding-up

If it was made to a non-associate person If it was made to a non-associate person within 2 years before commencement of within 2 years before commencement of winding-upwinding-up

Preliminary examination to the Preliminary examination to the directors on company’s affairsdirectors on company’s affairs Balance Sheet (Balance Sheet ( 資產負債表資產負債表 ))Total =48 30Seminar 10-2009

Realization of company’s assets Realization of company’s assets and businessand business

Payment of debt to creditorsPayment of debt to creditors Fixed charge Fixed charge 固定押記固定押記 (secured (secured

creditorcreditor 抵押債權人抵押債權人 )) Security created on fixed assetsSecurity created on fixed assets 固定資固定資

產產 : Land: Land Expenses of winding-upExpenses of winding-up

Liquidator and lawyer (legal costs)Liquidator and lawyer (legal costs)


Preferential debtPreferential debt 優先債項優先債項 Wages, severance payments (Wages, severance payments ( 遣散費遣散費 ), ),

long service paymentslong service payments Unpaid taxes payable to GovernmentUnpaid taxes payable to Government Bank and insurance companiesBank and insurance companies

Small depositors (up to $100,000)Small depositors (up to $100,000) Floating charge Floating charge 浮戶押記浮戶押記 (secured (secured

creditor)creditor) Security created on floating asset (Security created on floating asset ( 浮動資浮動資

產產 )) Stock in trade (Stock in trade ( 存貨存貨 )) CopyrightCopyright Book debts (account receivable)Book debts (account receivable) 應收帳應收帳

目目 Unsecured creditor (Unsecured creditor ( 無抵押債權人無抵押債權人 ))


Distribution of assets to Distribution of assets to shareholders according to their shareholders according to their share proportionshare proportion

Apply to court for dissolution of Apply to court for dissolution of the company (the company ( 公司解散公司解散 ))


THE END OF FINANCE THE END OF FINANCE JOURNALISMJOURNALISM


Interviewing Technique

(Part 1)

Total =4835 Seminar 10-2009

Total =4836

Interviewing Techniques for Journalists, Adams and HicksChapters 4, 5, 9 & 11

McIntyre on English News WritingChapters 6

Seminar 10-2009

What is an interview ?A conversation with a purpose ??

Information comes from talking to other people, known as sources

Is it related to the questioning skills only ?Inter-communication skillOuter appearanceUse of wordsPreparation and research


Non-questioning skillsListen and encourageUse silenceMake statements requiring confirmation /

denialSummarise and move on


Listen and encourageGood interviewers are good in looking and

listeningGood listening is hearing and

understandingMust show interest on what was being saidEye-sight


Use silenceNot to jump in with another question or

comment as soon as the interviewee has finished speaking

Count at least 4 seconds silently to yourselfInterviewee would amplify their last

commentIs it any limitation to this rule ?


Making statements requiring confirmation/denialNot to ask question but to seek

confirmation/denialPut your case to the interviewee

I see from the cutting that you have a house in the south west of France

I understand you were once convicted of being drunk and incapable

But be sure you know the answer as you don’t know what negative buttons you are pressing


Summarise and move onSummarise what the interview has said,

restate it and then move on“So what you’re saying is … Now I’d like to

turn to”


Types of questionsClosed: ‘yes’ or ‘no’

“Do you …….?”Open

“How did you feel …..?”“What did you see ….?”

Leading ( 引導性 )Question-tag: You’re assuming the answer“You are dishonest, aren’t you?”“When was the last time you took the drug?”Don’t ask until:-

You know the answer; andYou want to put your case to him.


Closed-ended question

Total =4844

It limits the possible responses of the intervieweeWould you say that you agree or disagree with

the president’s arms reduction policy? (Ans: agree or disagree)

Do you agree that your bureau is to blame for the delaying on the dissemination of information regarding swine flu? (Ans: yes or no)

It permits the report quickly to get specific information but it also limit the amount and kind of information obtained

Usually the sources, esp. government officials, have been trained to answer the closed-end question with further explanation (you won’t simply get an answer of either ‘yes’ or “’no’

Seminar 10-2009

Open-ended question

Total =4845

Imposes few restrictions on the intervieweeAnswers are longer, and the info may be

richerTell me about yourselfWhat was your childhood like?What is your favourite music?

Seminar 10-2009

Leading question ( 引導性問題 )

Total =4846

When the expected response or hidden premises ( 預設立場 ) are included in a question

A controversial technique that used to be prohibited in journalistic practice

Phrasing a question so that the expected response is suggested by the question

You suggest the answer rather than ask a questionBy way of the technique of “question tag”

You don’t agree with the management’s decision on this, do you?

Will you resign for the mistake made by your department?

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Total =4847

Don’t ask until:-You know the answer; andYou want to put your case to him ( 向

被訪者指出新聞界認為的『真相』 )Because interviewee may often deny

something which is too often to deny

Seminar 10-2009

Leading ( 引導性 )Question-tag: You’re assuming the answer“You are dishonest, aren’t you?”“When was the last time you took the drug?”Relates back to what the interviewee said

earlier in the interview to flatter the interviewee to show contradictions between his comments to make suggestions to the interviewee

Don’t ask until:-You know the answer; andYou want to put your case to him

Points to NoteAlways keep your questions short, simple and

clear.Don’t be the slave of your script! Follow up

whenever answers are not clear enough.Make your questions exact and precise.When you meet refusal, anger or aggression

because of your question, apologise and get back to it later.

If you want to ask questions that you know will cause trouble, leave them until the end when you have sufficient information on your notebook.

If the interviewee refuses to answer a particular question, you may point out how bad that will look when published.

Important aspects for interviewers

Appearance: suitable dressingEyes: eye-sight (don’t stare around)Face: looking at the facial expressionGestures: signals (p.61)Head: Nodding or shaking head?Posture: leaning forward? crossing both

arms? (p.62)

Different interviewees: PoliticiansPoliticians always look for the spotlightAlways sought to convey the same

messages that bored the journalistsSome try to throw you, make you

uncomfortableDon’t want to be interviewed by fools who

doesn’t done their homeworkH.K. reporters look young and inexperiencedWell-researched journalists are always

welcomed

Don’tDon’t ask stupid questionNever present your own politicsDon’t argue with the politicians even if you

know agree with them or if they appear to be arrogant ( 粗野 )

A good impressionWell-preparedDon’t be lateProper dressingKnow your topicsPay attention to the answersSympathetic and understanding response

Don’t tease your interviewee

Off the record Make sure you both understand exactly

what that meansSomething you agree not to print or quoteWin the trust of your interviewee

Switch off the recorderPut down clear mark in your n/b indicating

what is “off the record”

Difficult / unwelcome questionsNine main categories of response

See p.106Politicians look for publicity through

political interviews

Don’t concede! Make your own way!

Case StudyLegislator Lee

Chuek Yan

Trade union leader

Legislator

What does he want from you ?What are the political messages to be

conveyed ?

????

What can you get from her?As a legislator

What does he know?1st hand information related to labour policy?First priority to be consulted by the

government on new policy and law amendment

Let’s make a dealWhat is the consideration ( 交換條件 )?

?????

Special CasesInexperience

intervieweeThe official trip to

Singapore of our C.E.

Ng Ah Sio Pork Ribs Soup Eating House

Donald Tsang wanted to visit at night

A staff was interviewed by 林妙恩 of the HK Cable News“做生意唔可以咁，唔可以因為你係大人物，

就為你而做呢嘛，冇咁理由。”

Reported by other H.K. papers as“黃亞細肉骨茶”不賣曾蔭權的賬。

Apology by Ng Ah Sio in Sin Chew Daily “我是要做他的生意，但時間無法配合，我是心有餘

而力不足。我覺得很不好意思，所以要向特首道歉。”

Some thoughtsExperienced journalists in complete control

with the inexperienced intervieweesWhether to warn them not to be indiscreet

( 口沒遮攔 )Should you take the advantage and fish for

more and better quotes ?An ethical issue !

Final words

Make sure you’ve read Chapters 4, 5 & 11 before going for examination

Finance Journalism (III): Ethical and legal considerations for journalists Stanley Ma 7 May 2009...

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