The scandalous $2.1 billion buyout bid for Hong Kong Telco PCCW, led by business tycoon Richard Li, on Wednesday saw a new twist with the market regulator- Securities and Futures Commission seeking for a termination of the transaction, while the commission itself fought through multiple charges of favoritism slapped by the city’s lawyers.

While such events marred the day one of the two-day High Court hearing that was summoned to decide whether PCCW, the city''s largest fixed-line operator, should be allowed to de-list from the city's stock exchange and go into private hands, any final decision on the case is said to be unlikely to happen in the day two as well.

The saga over the controversy kick started when investor David Webb said he had been tipped off that hundreds of insurance sales agents for one firm were offered PCCW shares in return for voting yes to the deal at a shareholder meeting.

Webb's accusation prompted the Securities and Futures Commission (SFC) to launch an investigation and seize voting records from the meeting in February, which approved the buyout.

Thus, the SFC seized voting records after the February vote and has now asked Justice Susan Kwan to veto the transaction.

The regulator said some investors had distributed PCCW shares to colleagues, friends and family members in an attempt to garner additional votes for the transaction.

Mr Li is offering to buy out minority investors at HK$4.50 a share. PCCW's shares have consistently traded at a discount to the offer price, giving the recipients of free shares an incentive to vote for the privatization.

But attorneys for PCCW Ltd. on Wednesday defended saying regulators lacked evidence of wrongdoing and that whoever had sold the shares to the agents at Fortis Insurance Company (Asia) Limited had done nothing wrong.

They also said officials with Hong Kong's Securities and Futures Commission lacked evidence showing the company's former deputy chairman, Francis Yuen, played any improper role in the vote.

The SFC's representative, Winston Poon, replied that investors who had split their shares had engaged in an "abuse of the system".

The court session for the day will continue with Mr Poon, who couldn’t finish his submission.