HK Court extends injunctions freezing assets in GEM stock manipulation case

Maria Nikolova

The orders freeze assets of up to $124.9 million held by 15 local and overseas entities allegedly involved in the manipulation of shares of GEM-listed Ching Lee.

Deputy High Court Judge Liu has ordered that the interim injunctions granted to the Hong Kong Securities and Futures Commission (SFC) in July this year in a case concerning the manipulation of shares of GEM-listed Ching Lee Holdings Limited be continued.

The orders freeze assets of up to $124.9 million held by 15 local and overseas entities. The sum represents the combined profit made by the entities and their nominees in their alleged manipulation activities. The injunctions against several overseas entities cover their assets worldwide.

The SFC launched the proceedings under section 213 of the Securities and Futures Ordinance (SFO) against a group of local and overseas investors suspected of manipulating the shares of Ching Lee through a large scale and highly organised manipulative scheme in July 2019. On July 11, 2019, the regulator applied for urgent interim injunctions, with a view to ensuring that there are sufficient assets to meet the restoration orders that the court may make for the benefit of affected counterparties to the impugned transactions involving Ching Lee shares.

The SFC’s application for interim injunctions was made as part of the proceedings against 20 individuals and corporate entities (the defendants) alleging that they had devised, executed, or were otherwise involved in a scheme to manipulate Ching Lee shares, contrary to the SFO.

The SFC alleged that the manipulative scheme was planned and commenced before Ching Lee’s listing on 29 March 2016, and lasted for more than five months, resulting in the artificial inflation of the share price and turnover of Ching Lee shares between 29 March 2016 and 6 September 2016 and the collapse of the Ching Lee’s share price by 90% on 7 September 2016.

The SFC is also seeking orders against the defendants to disgorge their profits and/or restore the affected counterparties to their pre-transaction positions if the Court finds the defendants in contravention of the relevant provisions of the SFO.

The SFC’s Executive Director of Enforcement, Mr Thomas Atkinson, said: “Seeking injunction and restorative orders from the court against alleged cross-border manipulators is a key element of the SFC’s enforcement strategy to prevent alleged wrongdoers from cashing-in on their misdeeds and preserve suspected ill-gotten gains for future compensation to affected parties. Underscoring the Commission’s commitment to zero tolerance of market misconduct and safeguarding the interests of the investing public and market integrity, the SFC will continue to take appropriate and necessary actions to combat market manipulations.”

A market manipulator may be liable to criminal prosecution in which the maximum penalty is HK$10 million and 10 years of imprisonment, which can be imposed upon conviction on indictment.

Read this next

Digital Assets

BlackRock digs further into crypto with metaverse ETF

BlackRock, the world’s largest asset manager with almost $10 trillion in AUM, is set to launch a new metaverse ETF to help investors securely monetize on the booming immersive version of the internet.

Digital Assets

Binance wins license in New Zealand as rival Huobi shutters derivatives

Binance, the world’s largest crypto exchange by traded volume, has obtained licenses to operate in New Zealand, even after rival Huobi shutdown derivatives trading last month due to concerns about regulations.

Retail FX

Hong Kong busts perpetrators of ‘ramp and dump’ scam

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has charged thirteen suspects of market manipulation in a joint operation with the local police.

Institutional FX

TradingView integrates market data from German Tradegate exchange

TradingView announced that it ‎has increased data coverage to allow its users to receive information from ‎and get free access to the intra-day and tick data from Tradegate Exchange.

Retail FX

Spotware Systems introduces Custom Push Notifications for cTrader mobile apps

Spotware Systems, a technology provider for the electronic trading industry, is introducing a new push notification feature to alert mobile users of price swings and market fluctuations through their cTrader app.

Market News

The Week Ahead: 30 September from David Madden, Market Analyst at Equiti Group

Sterling dominated the headlines last week, as there were concerns the UK government might struggle to service its debt.

Inside View

How does the quality of signal providers affect your business?

A must-have onboarding process for brokers with investment services like PAMM, MAM, or copy trading

Technology

DBS deploys Nasdaq Trade Surveillance

“The confidence that markets and our clients have in DBS as a safe and trusted banking group is anchored on our ability to detect and respond to anomalous activity, which in turn calls for a robust surveillance and prevention infrastructure.”

Industry News

SEC charges Justin Costello and David Ferraro for securities fraud and posing as billionaire veteran

The Securities and Exchange Commission charged Cannabis executive Justin Costello and David Ferraro, an associate of Costello’s, for promoting the stock of several microcap companies on social media without disclosing their own simultaneous stock sales as market prices rose.

<