More than a dozen people were arrested this week for trading shares in Next Digital Ltd. in August. Next Digital is a Hong Kong-listed company affiliated with pro-democracy newspaper Apple Daily and the trades were made in the aftermath of a police raid on the news group's headquarters.
In the Aug. 10 raid, Apple Daily founder and wealthy business owner Jimmy Lai was brought into police custody and charged with violating the newly implemented National Security Law.
Next Digital stock briefly rose as high as 2,000% the following day before stabilizing. Its price per share is now HK$0.41 - which remains a fourfold increase on pre-raid prices which historically hovered around HK$0.10 per share.
Film of officers rifling through the desks of journalists and taking company executives in for questioning galvanized the public to show support by buying copies of the daily newspaper and snapping up shares in Apple Daily's parent company.
The arrested individuals, 14 men and one woman, collectively bought and sold roughly 1.69 billion shares in Next Digital, according to the police, and were arrested on suspicion of conspiracy to defraud and processing proceeds of crime.
"We have reasonable grounds to believe that this is not an ordinary market-speculation activity, but rather an intentional attempt to push up the trade volume to distort the market and to attract innocent members of the public to invest," the city's narcotics bureau chief superintendent Chung Wing-man said.
Lai himself urged caution among supporters and advised supporters to stop buying shares after market regulators issued a warning last month.
But as news of the arrests spread through the city Thursday, Next Digital shares briefly dipped before rising again by as much as 97% according to local news reports.
The Hong Kong Securities and Futures Commission has refrained from commenting on the case.
Officers spoke out against allegations that the raid and recent arrests were politically motivated, citing the specific actions of individuals in question as justification.
They "were involved in a stock investment fraud totaling approximately HK$38.7 million ($5 million) in proceeds," the police said in a statement issued on Facebook. The bulk of this sum is attributed to one person, who made more than HK$25.5 million in profit, according to officers.
A civil servant, gang member and six unemployed people were among those arrested. "The police will continue to investigate the sources of funds of the persons concerned and whether other individuals were involved behind the scenes," the statement said.
The August raid on the news group's headquarters, in which more than 200 police officers marched onto the premises to conduct a search, came after years of tension between the two parties.
The troubled relationship traces back to the Occupy Central movement in 2014 when Lai came out strongly in support of the movement and condemned police actions against protesters.
Apple Daily articles are known for casting a critical gaze on Hong Kong government activity and their reporters have frequently been targeted by thugs believed to be affiliated with pro-establishment parties.
Next Media is forbidden from opening a mainland China bureau and is barred from covering many official events. In 2014, the news group's website was brought down by a cyberattack widely believed to be the work of China-backed forces.
