The corporate flag for Hong Kong Exchanges & Clearing Ltd, right, and the Chinese flag, left, fly outside the Exchange Square complex in Hong Kong, China, on Sept 16, 2019. (PHOTO / BLOOMBERG)

A Hong Kong court ruled that a former senior official at the city’s stock exchange was not guilty on charges of taking bribes to facilitate at least 12 initial public offerings.

After about three months of deliberation, District Court Judge Gary Lam Kar Yan said on Friday that the prosecution had failed to provide unchallenged evidence that Eugene Yeoh, who was IPO vetting co-head at Hong Kong Exchanges and Clearing Ltd, had received bribes from his co-defendant, Richard Lum.

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Prosecutors had argued that Yeoh took HK$9.15 million ($1.2 million) from Lum, who was also acquitted, to pave the way for listings. The pair, who had both pleaded not guilty, faced maximum prison sentences of seven years.

Prosecutors and the defense called more than 20 people to the stand, including bankers, brokers and exchange officials, during the six-week trial. Yeoh and Lum didn’t testify

They were arrested in June 2019 after a joint operation by the Independent Commission Against Corruption and the Securities and Futures Commission codenamed “Cold Mountain.” Shortly before his arrest, Yeoh resigned from the exchange after a tip-off triggered an internal probe that found he had routinely deleted emails and phone messages and failed to provide financial statements for the vetting process.

Prosecutors and the defense called more than 20 people to the stand, including bankers, brokers and exchange officials, during the six-week trial. Yeoh and Lum didn’t testify.

Yeoh’s defense said Lum was merely a personal acquaintance and that he was not aware of any of Lum’s connections to IPOs.

Lum, who was dubbed “IPO Guru” in certain circles, often made deals in a local nightclub and raked in millions in Hong Kong dollars in consulting fees by highlighting his close connections to insiders at the bourse, according to the prosecution.

The judge also rejected the prosecution’s argument that bribes were deposited to an account of Yeoh’s wife, Vivian Hou, a fund manager. 

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At the trial, Hou said the cash was invested on behalf of Lum in hedge funds and pre-IPO shares in companies such as Kuaishou Technology and Lufax Holding Ltd.

The judge said on Friday that the court accepted the explanation that the money was intended for investments.