Interactive Brokers, Guotai Junan, GF Securities among brokers to get SFC notices to freeze certain client accounts

Maria Nikolova

The Hong Kong regulator has issued restriction notices to dozens of brokerages to freeze client accounts linked to suspected manipulation of shares in Smartac Group China Holdings and China Ding Yi Feng Holdings.

The Hong Kong Securities and Futures Commission (SFC) has issued restriction notices to a number of brokerages over the suspected manipulation of the shares of Smartac Group China Holdings Limited and China Ding Yi Feng Holdings Limited.

The regulator has issued restriction notices to 14 brokers, prohibiting them from dealing with or processing certain assets held in their client accounts which are related to suspected market manipulation in the shares of Smartac Group China Holdings Limited between October 2018 and March 2019.

The brokers are: Changjiang Securities Brokerage (HK) Limited, Central China International Securities Co., Limited, China Galaxy International Securities (Hong Kong) Co., Limited, Fulbright Securities Limited, GF Securities (Hong Kong) Brokerage Limited, Guosen Securities (HK) Brokerage Company, Limited, Guotai Junan Securities (Hong Kong) Limited, Guoyuan Securities Brokerage (Hong Kong) Limited, HGNH International Securities Co., Limited, Interactive Brokers Hong Kong Limited, KGI Asia Limited, Yue Xiu Securities Company Limited, Yunfeng Securities Limited and Zhongtai International Securities Limited.

The regulator has also issued restriction notices to nine brokers, prohibiting them from dealing with or processing certain assets held in their client accounts which are related to suspected market manipulation in the shares of China Ding Yi Feng Holdings Limited (China Ding Yi Feng) between 2018 and early 2019.

The brokers are: Central China International Securities Co., Limited, CMB International Securities Limited, HGNH International Securities Co., Limited, Kaisa Securities Limited, Sun Hung Kai Investment Services Limited, Tian Yuan Finance Limited, Victory Securities Company Limited, Yue Xiu Securities Company Limited and Zhongtai International Securities Limited.

The SFC stresses that it is not investigating any of these brokers, which have cooperated with the regulatory investigation. The restriction notices do not affect their operations or their other clients.

The restriction notices prohibit the brokers, without the SFC’s prior written consent, from disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with any assets in any way in the client accounts, including: (i) entering into transactions for any securities; and/or (ii) processing any withdrawals or transferring of securities and/or cash arising from the disposal of securities; and/or (iii) disposing of or dealing with any securities or cash on the instructions of any authorized persons of the client accounts or by any persons acting on their behalf; and/or (iv) assisting another person to dispose of or deal with any relevant property in the client accounts in any manner. The brokers are also required to notify the SFC if they receive any of these instructions.

The SFC considers that issuing the restriction notices is desirable in the interest of the investing public or in the public interest.

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