HONG KONG - A former investment banker at regional brokerage CLSA and an ex-fund manager have pleaded guilty to charges of insider dealing, the city's financial watchdog said.

The conviction, the eighth made by the Securities and Futures Commission (SFC) for insider trading over the past 12 months, has underscored the regulator's bid to toughen enforcement measures against market malpractice.

In a statement late Tuesday, the SFC said that Allen Lam, a former investment banking director at Hong Kong-based CLSA, and Ryan Fong, an ex-hedge fund manager at HSZ Ltd, pleaded guilty at the District Court to two charges involving shares in Media Partners International Holdings.

The regulator said Lam tipped off Fong in 2005 that a buyer would soon be acquiring a controlling stake in Media Partners. CLSA acted as the financial adviser for the buyer in the takeover at the time, although Lam was not directly involved in the deal, it said.

Fong then went about accumulating 10.6 million Media Partner shares for himself and a HSZ fund he was authorised to trade for, at the price of 0.60-0.83 Hong Kong dollar (0.08-0.11 US dollars) a share, the SFC said.

The takeover was announced in September 2005 and the share price of Media Partners jumped dramatically.

Fong sold his shares at 1.09-1.10 dollars a share, making a profit of 3.39 million Hong Kong dollars (435,000 US) for the HSZ fund and 1.02 million dollars for himself, the SFC said.

The two stayed in contact via email, according to the regulator, using a code, "the French car," to refer to the deal.

Judge Eddie Yip remanded the two in custody on Tuesday, pending sentencing on July 13.

Despite Hong Kong's role as a financial hub with one of the most liquid stock markets in the region, regulators here have been criticised in the past for lax enforcement of the city's securities laws.

But over the past year, the SFC has gone on the offensive by aggressively pursuing insider trading and other market abuses.

In May, the SFC won one of its biggest victories to date when a Hong Kong court supported the regulator's request to block the privatisation of telecom giant PCCW on vote-rigging allegations.