Hong Kong SFC Issues Lifetime Ban & $218,000 Fine on Agg. Asset Management Responsible Officer Ng Ka Shun for Serious Misconduct Including Window-Dressing Liquid Capital for License Application & Sufficient Liquidity from 2017 to 2020, Mismanaging 2 Funds, Failed to Avoid Conflicts of Interests by Investing Substantial Assets in Debentures Issued by Companies Controlled by Himself & Providing the Funds as Loans to Himself Thereafter, Withdrawing Invested Funds for Personal Use, Invested in 2 Debentures for the Purpose of Inflating Fund Net Asset Value and Failure to Invest by Following Fund Mandate
31st December 2024 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has issued a lifetime ban and $218,000 fine (HKD 1.7 million) on Agg. Asset Management Responsible Officer Ng Ka Shun for serious misconduct, including window-dressing liquid capital for license application & to support sufficient liquidity from 2017 to 2020, mismanaging 2 funds, failing to avoid conflicts of interests by investing substantial assets in debentures issued by companies controlled by himself & providing the funds as loans to himself thereafter, withdrawing invested funds for personal use, investing in 2 debentures for the purpose of inflating fund net asset value and failure to invest by following fund mandate. Hong Kong SFC (23/12/24): “The Securities and Futures Commission (SFC) has banned Mr Ng Ka Shun, responsible officer (RO) of Agg. Asset Management Limited (Agg), for life and fined him $1.7 million for window-dressing Agg’s financial resources and mismanaging two funds (Notes 1 to 3). Window-dressing financial resources – The SFC found that Ng began window-dressing Agg’s financial resources when the firm submitted its licence application. He misled the SFC into believing that Agg had satisfied the financial requirements for a licence by window-dressing the firm’s liquid capital as of 31 March 2017. After obtaining a licence for Agg, Ng continued to perpetuate the facade that Agg had sufficient liquid capital from May 2017 to February 2020 by providing false or misleading information in the financial returns submitted to the SFC to mask its inability to maintain the required liquid capital of $3 million for 34 months. Deficiencies and substandard conduct in fund management – The SFC also found that Agg mismanaged two funds in its capacity as investment manager which seriously jeopardised the interests of the funds’ investors, with Ng responsible for making investment decisions for both funds during the material time. (i) Conflicts of interest and risk management. In one of the two funds, Agg invested substantially all of its assets in debentures issued by companies controlled by Ng. By doing so, Agg failed to avoid conflicts of interest and properly manage the risks of the fund, resulting in Ng granting loans to himself with the investors’ subscriptions. Agg also caused the fund to invest in two debentures which appeared to have been constructed for the purpose of inflating the fund’s net asset value. (ii) Investment within mandate, safety of fund assets and valuation. In another fund, Agg failed to properly safeguard the fund’s assets by allowing Ng to withdraw part of the investors’ subscriptions from the fund ultimately for his own benefit. Agg further failed to ensure that the fund’s investments were in line with its stated investment objective and its assets were valued and properly accounted for. The SFC is of the view that Agg’s window-dressing activities breached the SFO, the Securities and Futures (Financial Resources) Rules (FRR) and the Code of Conduct, thereby jeopardising the integrity of the market (Note 4). The mismanagement of funds by Agg breached the Fund Manager Code of Conduct, resulting in substantial loss to investors.” More info below:
“ Hong Kong SFC Issues Lifetime Ban & $218,000 Fine on Agg. Asset Management Responsible Officer Ng Ka Shun for Serious Misconduct Including Window-Dressing Liquid Capital for License Application & Sufficient Liquidity from 2017 to 2020, Mismanaging 2 Funds, Failed to Avoid Conflicts of Interests by Investing Substantial Assets in Debentures Issued by Companies Controlled by Himself & Providing the Funds as Loans to Himself Thereafter, Withdrawing Invested Funds for Personal Use, Invested in 2 Debentures for the Purpose of Inflating Fund Net Asset Value and Failure to Invest by Following Fund Mandate “
Conclusion – The SFC considers that Agg’s regulatory breaches were attributable to the failure of Ng in discharging his duty as the firm’s senior management and RO, including his failure to ensure the maintenance of appropriate standards of conduct and adherence to proper procedures by Agg. As such, Ng’s dishonest conduct amounted to a blatant disregard for law and compliance with regulations. In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including:
- Ng’s actions in window-dressing Agg’s liquid capital position are serious, and demonstrate an outright disregard of the FRR which serve as significant statutory safeguards for the interests of the investors in the market;
- the window-dressing activities of Agg started when the firm applied for an SFC licence and lasted until the SFC issued a restriction notice (Note 5);
- Ng acted dishonestly and exploited the investors of the two funds;
- Ng took the benefit of or is otherwise unable to account for $1.7 million of the subscription proceeds of one of the funds;
- removing Ng from the industry is necessary to protect the investing public; and
- Ng had an otherwise clean disciplinary record.
Notes:
- Agg was licensed under the Securities and Futures Ordinance (SFO) to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities from 4 May 2017 to 5 July 2024.
- On 5 July 2024, a notice was published in the Gazette which stated that Agg had been struck off the Companies Register and dissolved. Under section 195 of the SFO, the licence of Agg is deemed to be revoked.
- Ng was Agg’s sole shareholder and director. He was accredited to Agg and approved to act as its RO for Type 1 (dealing in securities) regulated activity from 4 May 2017 to 12 October 2020. He was also Agg’s Manager-in-Charge (MIC) of Overall Management Oversight and Key Business Line from 13 July 2017 to 3 April 2020, and MIC of Compliance, Anti-Money Laundering and Counter-Terrorist Financing, Operational Control and Review, Finance and Accounting and Information Technology from 11 April 2019 to 3 April 2020.
- Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
- On 3 April 2020, the SFC issued a restriction notice to Agg prohibiting it from carrying on any business which constituted regulated activities for which it was licensed under the SFO until further notice. Please refer to the SFC’s press release dated 3 April 2020.
- On 9 October 2024, the SFC issued a circular flagging various deficiencies and substandard conduct identified during its supervision of asset managers and their senior management. Please refer to the SFC’s press release dated 9 October 2024.
Hong Kong SFC Issues Lifetime Ban & $218,000 Fine on Agg. Asset Management Responsible Officer Ng Ka Shun for Serious Misconduct Including Window-Dressing Liquid Capital for License Application & Sufficient Liquidity from 2017 to 2020, Mismanaging 2 Funds, Failed to Avoid Conflicts of Interests by Investing Substantial Assets in Debentures Issued by Companies Controlled by Himself & Providing the Funds as Loans to Himself Thereafter, Withdrawing Invested Funds for Personal Use, Invested in 2 Debentures for the Purpose of Inflating Fund Net Asset Value and Failure to Invest by Following Fund Mandate
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