The Court of First Instance has ordered Hong Kong Wan Kiu Investment Company Limited (HKWK), its sole director and shareholder, Ms Connie Sham Khi Rose, and Sham & Partners Limited (SPL) to compensate clients of HKWK in legal proceedings brought by the Securities and Futures Commission (SFC) under section 213 of the Securities and Futures Ordinance (SFO) (Note 1).
SPL, incorporated in Hong Kong, is solely owned by the son of Connie Sham, Mr Christopher Sham Ho Ming.
The SFC’s investigation found that HKWK and Connie Sham had:
- sold securities of HKWK’s clients without their authorisation;
- misappropriated the sales proceeds which belonged to HKWK’s clients; and
- fabricated authorisation documents and account statements of HKWK’s clients to conceal the unauthorised transactions.
It is also believed that part of the misappropriated proceeds in the sum of $76 million was transferred to the bank account of SPL.
The Court has appointed administrators to recover, receive, administer and distribute assets of approximately $19 million frozen by the interim injunction obtained by the SFC in February 2020 to restrict HKWK and its connected entities from disposing their assets. Prior to obtaining the interim injunction, the SFC issued a restriction notice against HKWK in November 2019 (Notes 2 to 4).
The SFC also alleges that HKWK and Connie Sham have contravened, amongst others, section 300 of the SFO by employing a device, scheme or artifice with intent to defraud or deceive, or engaging in an act, practice or course of business which is fraudulent or deceptive, or would operate as a fraud or deception in transactions in securities.
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Notes:
- HKWK was licensed under the SFO to carry on Type 1 (dealing in securities) regulated activity. Connie Sham is the sole director and shareholder of HKWK, and was the responsible officer and manager-in-charge of anti-money laundering and counter-terrorist financing, compliance, key business line, operational control and review, overall management oversight and risk management of HKWK at the material times.
- The administrators are Mr Fok Hei Yu and Mr Daniel Chow Wai Shing of FTI Consulting (Hong Kong) Limited.
- The terms of the interim injunction orders under which the funds were frozen were subsequently continued and varied.
- Under the restriction notice, HKWK was prohibited from carrying on any regulated business for which it is licensed under the SFO and disposing of and dealing with any property held by it or held on behalf of its clients until further notice. Please see the SFC’s press release dated 5 November 2019 for details.
source: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=22PR97