Adrian is an employee of Best Limited (Best) a Hong Kong listed company that manufactures garden furniture in China for sale all over the world.

In May 2020, Celia, the secretary to the managing director of Best, told Adrian that she had received a copy email sent to her boss from the Finance Director of Creative Limited (Creative), a Hong Kong and London listed company. Creative is a supplier of Best. The email stated that Creative was about to secure a long-term supply contract with a major Japanese manufacturer. Celia thought that the share price of Creative would rise as soon as the news became public. She said that she had already bought some Creative shares and suggested to Adrian that it is a great idea to buy Creative shares now.

In August 2020, Adrian was dismissed from Best for laziness and was furious with the perceived injustice of his removal. He decided to act on the information about Creative. He instructed his bank to buy 100,000 Creative shares in London through their UK branch. The same day he gave his instructions to his bank; Adrian spoke to his girlfriend Emma and suggested that she too should buy Creative shares. Emma always trusted Adrians financial advice but had no spare cash and got her father Francis to buy 50,000 Creative shares, which were registered in her own name.

At the same time as these two purchases were taking place, Adrian posted two messages on the popular Hong Kong STOCKWATCH website. The first said Buy Creative shares now; good news imminent and the second said Sell Best shares now they are from a rotten company with terrible cash flow problems.

(a) Advise Adrian, Celia, Emma and Francis on their possible liabilities under the Securities and Futures Ordinance (Cap. 571). (17 marks)

(b) If the above parties were liable under the SFO, what would be the penalties under the SFO? (8 marks)

(Total: 25 marks)