Two foreign exchange brokers have been jailed for frustrating an investigation by the Securities & Futures Commission in relation to market manipulation of the shares of publicly listed Shanghai Land Holdings Limited.

Lam Kai-sing, 43, and Cheung Pak-yau, 46, were jailed for eight and six months respectively.

The defendants had earlier pleaded guilty to a total of three counts of knowingly making a false statement in answering questions put to them by the commission in relation to an investigation in respect of dealings in Shanghai Land shares.

The judge said the defendants' dishonest act was premeditated, adding that immediate custodial sentences were necessary for a deterrent effect and to safeguard Hong Kong's reputation as an international financial centre.

From April to May, 2003, Mo Yuk-ping was the general manager of Shanghai Land and Chung Sau-ling was his secretary. The defendants came to know Mo through a common friend, Siu Yim-wah.

In 2000, Siu asked the defendants to open securities accounts with a number of brokerage firms in their names. The defendants were told that such accounts were for Mo's use, and they agreed to the arrangement.

On September 30, 2002, with the defendants' knowledge, 20 million and 10 million Shanghai Land shares, placed from Global Town Limited, the major shareholder of the listed company, were subscribed in the name of Lam and Cheung respectively.

The consideration for the above placement was respectively $16,459,699 and $8,229,848.

In January 2003, the commission investigated the suspicious trading in the Shanghai Land shares, and the defendants were required to attend interviews with the commission.

A few days before an interview in April 2003, the defendants separately met with solicitor Wong Pui-fai.

Wong told them to account for their dealings in Shanghai Land shares by saying it was their own investment. Wong also instructed the defendants to tell the commission that they had borrowed money for the subscription from another person.

During the commission's interviews, the defendants followed Wong's instructions and made false statements to the interviewing officers.