Hong Kong Court Fines Individual $768 for Dealing in Securities without Licence, Enticed 3 Retail Investors to Invest in First Asia Holdings & First Asia Capital for Potential Secondary Listing on Hong Kong Exchange with Share Price to Increase by 100%
27th July 2023 | Hong Kong
The Hong Kong Eastern Magistrates’ Court has fined an individual $768 (Cheung Wing Hung, HKD 6,000) for dealing in securities without a registered licence in Hong Kong, enticing 3 retail investors to invest in First Asia Holdings &/or First Asia Capital for a potential secondary listing on Hong Kong Exchange with share price to “forecasted” to increase by 100%. Hong Kong Securities & Futures Commission (SFC): “The Eastern Magistrates’ Court has convicted Mr Cheung Wing Hung for holding himself out as performing a regulated function in relation to dealing in securities as an agent of entities not licensed by the Securities and Futures Commission (SFC). Cheung pleaded guilty to the offence and was fined $6,000 and ordered to pay the SFC’s investigation costs. The Court found that between April 2016 and June 2017, Cheung, while holding himself out as an agent of First Asia Holdings Limited (FAH) and/or First Asia Capital Limited (FAC), enticed three retail investors to invest in so-called “US-listed” shares issued by FAH, to finance FAH and/or FAC in their preparation for the purported secondary listing of FAH shares in Hong Kong. Cheung represented to the investors, among other things, that if the secondary listing in Hong Kong was successful, the value of their investment in FAH shares would increase by 100% and that if they intended to realise their investment return, they would have to swap their FAH shares for the shares in a Hong Kong-listed corporation, namely PF Group Holdings Limited (PF). By the time the investors received their PF shares, the price of the PF shares had fallen substantially.” See below for Hong Kong SFC statement.
“ Hong Kong Court Fines Individual $768 for Dealing in Securities without Licence, Enticed 3 Retail Investors to Invest in First Asia Holdings & First Asia Capital for Potential Secondary Listing on Hong Kong Exchange with Share Price to Increase by 100% “
Hong Kong Court Fines Individual $768 for Dealing in Securities without Licence
27th July 2023 – The Eastern Magistrates’ Court has convicted Mr Cheung Wing Hung for holding himself out as performing a regulated function in relation to dealing in securities as an agent of entities not licensed by the Securities and Futures Commission (SFC) (Note 1). Cheung pleaded guilty to the offence and was fined $6,000 and ordered to pay the SFC’s investigation costs.
The Court found that between April 2016 and June 2017, Cheung, while holding himself out as an agent of First Asia Holdings Limited (FAH) and/or First Asia Capital Limited (FAC), enticed three retail investors to invest in so-called “US-listed” shares issued by FAH, to finance FAH and/or FAC in their preparation for the purported secondary listing of FAH shares in Hong Kong (Notes 2 & 3).
Cheung represented to the investors, among other things, that if the secondary listing in Hong Kong was successful, the value of their investment in FAH shares would increase by 100% and that if they intended to realise their investment return, they would have to swap their FAH shares for the shares in a Hong Kong-listed corporation, namely PF Group Holdings Limited (PF). By the time the investors received their PF shares, the price of the PF shares had fallen substantially. The Court also fixed the pre-trial review of the SFC’s prosecution against Mr Tse Tsun Wai for 19 September 2023 after he pleaded not guilty to charges for holding himself out as performing a regulated function in relation to dealing in securities in respect of PF shares without a licence from the SFC (Note 4).
The SFC reminds investors to check the SFC’s Public Register of Licensed Persons and Registered Institutions on the SFC website (www.sfc.hk) before investing to ensure that firms and people who provide dealing services in securities are properly licensed.
Notes:
- Under Schedule 5 of the Securities and Futures Ordinance (SFO), “dealing in securities” is a type of regulated activity under the SFO. Under section 114(3)(b) of the SFO, it is an offence for any person to hold himself out as performing a regulated function, in relation to any regulated activity, without a licence from the SFC.
- Cheung was licensed under the SFO to carry on Type 1 (dealing in securities) regulated activity, and accredited to Imperium International Securities Limited, from October 2014 to July 2016. He is currently licensed under the SFO to carry on Type 1 (dealing in securities) regulated activity and is accredited to HGC Investment Management (HK) Limited.
- FAH and FAC have never been licensed with the SFC in any capacity in relation to a regulated activity. FAH shares were traded on the over-the-counter market in the United States.
- The Court has earlier convicted Ben Ngai Ping Kuen for holding himself out as performing a regulated function in relation to dealing in securities in respect of PF shares without a licence from the SFC. Please refer to the SFC’s press release dated 5 July 2023.
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