Earlier in 5 November 2019, the Securities and Futures Commission (“SFC”) issued a restriction notice pursuant to Section 204 and 205 of the Securities and Futures Ordinance (“SFO”) to Hong Kong Wah Kiu Investment Company Limited (“HKWKICL”) prohibiting the firm from (i) carrying on any business (directly or through agents) which constitutes regulated activities for which it is licensed under the SFO; and (ii) disposing of, dealing with, assisting, counselling or procuring another person to dispose or deal with property held by it or held on behalf of its client without written consent of the SFC.
At all material times, the sole director and shareholder of HKWKICL is Ms. Connie Sham Khi Rose. HKWKICL was licensed under the SFO to carry on Type 1 (dealing in securities) regulated activity. Ms. Connie Sham is also 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 HKWKICL at the material times. Sham & Partners Limited (“SPL”) is solely owned by Mr. Christopher Sham Ho Ming, the son of Ms. Connie Sham.
The SFC’s investigation revealed that HKWKICL and Ms. Connie Sham had:-
- sold securities of HKWKICL’s clients without their authorisation;
- misappropriated the sales proceeds which belonged to HKWKICL’s clients; and
- fabricated authorisation documents and account statements of HKWKICL’s clients to conceal the unauthorised transactions.
It is also revealed that part of the misappropriated proceeds in the sum of HK$76 million was transferred to the bank account of SPL.
The SFC also alleges that HKWKICL and Ms. 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.
Eventually, the SFC had obtained an interim injunction in February 2020 to restrict HKWKICL and its connected entities from disposing their assets.
The SFC brought proceedings under Section 213 of the SFO, and eventually the Court of First Instance ordered HKWKICL, Ms. Connie Sham, and SPL to compensate clients of HKWKICL. The Court also appointed administrators to recover, receive, administer and distribute assets of approximately $19 million frozen by the interim injunction obtained by the SFC.
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