Police have arrested 15 people on suspicion of conspiracy to defraud and money laundering over the recent price surge in Next Digital's shares after its founder Jimmy Lai was arrested on August 10, but officers acknowledged at a press conference on Thursday they were not sure if investors were indeed misled.
Chief Superintendent of the Narcotics Bureau, Chung Wing-man, said the suspects had made 13,000 transactions of the stock in three days, creating an impression that it was in high demand.
The number of shares that changed hands accounted for 23 percent of the transactions during this period.
Chung described the transactions as far from being normal trading activities.
"On a number of occasions, after they offered to sell their stock and before their selling order could be executed in the market, they brought back the stocks immediately and therefore we have reasonable grounds to believe that it is not an ordinary market-speculation activity, but rather an intention to push up the trade volume to distort the market situation and to attract innocent members of the public to invest," she said.
Officers said the suspects made use of the social media to attract small investors and made HK$38 million in profit, with one suspect pocketing as much as HK$25 million.
Police said one victim, an elderly man, lost HK$1 million.
But Chung also said the police could not say for sure if investors were misled.
'It is very likely that we may never find out because investors... they have many reasons to invest in a particular stock. But objectively speaking, it is very likely that some investors were attracted by the massive increase in trade volume, which is a false market situation presented by these culprits or these arrested persons."
Police also insisted Apple Daily was not being targeted because of its political stance. Instead, the probe had to do with the activities of the individuals in question.
The Securities and Futures Commission said it has no comments on the case.
Among the 15 people arrested were a civil servant, a suspected triad member, and six people who were unemployed. They're aged between 22 and 53.
Police also said some of them knew each other.
Shares of Next Digital, which publishes Apple Daily, started hitting new highs soon after Lai's arrest and around 200 police officers marched into the Next Media building last month to conduct a search.
As footage of officers looking for evidence in the Apple Daily newsroom was being beamed live, some democracy activists hit social media urging investors to support the company.
Shares in Next Digital continued their surge for a couple of days, and Lai later cautioned people against buying his company's stock, saying the price surge was not sustainable.
Next Digital shares dropped about 20 percent on Thursday after news of the latest arrests broke.
It pared the losses later and headed north, finishing the day at HK$0.41, up 36 percent from Wednesday's close of HK$0.3.
Last updated: 2020-09-10 HKT 18:42