Hong Kong – SFC Convicts and Fines for Illegal Short Selling

Former responsible officer convicted and fined for illegal short selling.

The Eastern Magistrates’ Court has convicted Mr Sammy Shiu Kin Keung after he pleaded guilty to illegal short selling in the shares of Share Economy Group Limited (formerly known as Vitop Bioenergy Holdings Limited) , Global Tech (Holdings) Limited  and China Ocean Industry Group Limited (formerly known as China Ocean Shipbuilding Industry Group Limited) on 14 occasions.

Shiu was fined a total of $35,000 and was ordered to pay the Securities and Futures Commission’s (SFC) investigation costs.

In April and May 2014, Shiu placed orders to sell shares of the three companies through his personal trading account at China Rise Securities Asset Management Company Limited when he did not have sufficient quantities of the shares to sell. Shiu later bought back shares to cover some of his short sales and in doing so, made a profit of approximately $22,500.

By short selling the shares, Shiu was in contravention of section 170 of the Securities and Futures Ordinance (SFO).

Link to formal notice.

RRS Updates Rules for Egypt and Romania

On 23 May, Solutions Atlantic released updated rules for Egypt and Romania.

Information pertaining to Egypt:

The EFSA announced new rules which will restrict investment in issued share capital or bonds convertible to shares (voting or non-voting) of securities companies licensed in Egypt.

Such investment will require pre-acquisition approval of any acquisition (directly or indirectly and either alone or through a related group) when the acquisition reaches or exceeds the following percentages of the company’s capital or voting rights: 10%, 25%, one third, 50%, two-thirds or 75%.

Information pertaining to Romania:

  • TDA standard disclosure thresholds apply.
  • Cash settled instruments need to be disclosed.
  • Introduction of 5% trading book exemption.
  • Indicative instruments may be disclosable if the conditions for disclosure are met.