The Eastern Magistrates’ Court has convicted Mr Tse Tsun Wai of holding himself out as performing a regulated function in relation to dealing in securities without a licence from the Securities and Futures Commission (SFC) (Notes 1 and 2).
Tse pleaded guilty to the offence and was fined $4,800 and ordered to pay a sum of $50,000 as compensation to a retail investor who was a victim of the purported investment scheme. This is the first time the Court has made a compensation order in an SFO’s section 114(3) case.
The Court found that between April 2016 and June 2017, Tse enticed the retail investor to invest in so-called “US-listed” shares issued by First Asia Holdings Limited (FAH), to finance FAH and/or First Asia Capital Limited (FAC) in their preparation for the purported secondary listing of FAH shares in Hong Kong (Notes 3 and 4).
Tse represented to the investor, among other things, that if the secondary listing in Hong Kong was successful, the value of his investment in FAH shares would increase by 100% and that if he intended to realise his investment return, he would have to swap his FAH shares for the shares in a Hong Kong-listed corporation, namely PF Group Holdings Limited (PF). By the time the investor received his PF shares, the price of the PF shares had fallen substantially (Notes 5 and 6).
The SFC reminds investors to check the SFC’s Public Register of Licensed Persons and Registered Institutions on the SFC website (www.sfc.hk) to ensure that firms and people who provide dealing services in securities are properly licensed.
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Notes:
Under Schedule 5 to 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.
Tse was charged with offences under section 114(3)(b) of the SFO. Please see the SFC’s press release dated 27 July 2023.
Tse was licensed under the SFO and was accredited to Sun International Securities Limited (now known as Imperium International Securities Limited) to carry on Type 1 (dealing in securities) regulated activity from 8 September to 8 October 2014 and was accredited to PC Securities Limited from 21 to 29 December 2015. Tse is currently not licensed by the SFC.
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 Mr 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.
The Court has earlier convicted Mr Cheung Wing Hung for holding himself out as performing a regulated function in relation to dealing in securities in respect of PF shares as an agent of entities not licensed by the SFC. Please refer to the SFC’s press release dated 27 July 2023.
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