Published On: Sun, Mar 3rd, 2013

HK SFC Obtains Court Order to Freeze Assets

Ashley Alder, HK SFC CEO

Ashley Alder, HK SFC CEO

The Securities and Futures Commission (SFC) has commenced legal proceedings in the High Court against five defendants in relation to allegations of misappropriation of clients’ assets by two former staff of China Pacific Securities Limited (China Pacific Securities) (Note 1).

The SFC alleges that former account executive, Mo Shau Wah, and former settlement clerk, Hui Fong Ting, misappropriated client securities held at China Pacific Securities using false documents and records.

The alleged misappropriation came to light during an on-site inspection by the SFC in November 2012. At the time of the commencement of the proceedings, the market value of the discrepancy in client securities accounts was about $156 million.

The SFC earlier obtained an ex parte interim order against Mo prohibiting her from disposing of her assets worldwide in the amount of $156,471,705. A similar interim order was also obtained against Hui in relation to her Hong Kong assets.
The SFC has also obtained an interim order against three nominees preventing them from disposal of any assets in suspected nominee accounts.

The Honourable Mr Justice Poon at today’s hearing continued the interim injunctions after representatives of Mo, Hui, and one of the nominees raised no objection to the order remaining in force.
China Pacific Securities and its owners put in place arrangements to reduce and potentially avoid loss to clients. However, the SFC is seeking orders to recoup the losses caused to China Pacific Securities.
The use and possible whereabouts of proceeds of the alleged misappropriation largely remain unknown at this stage. The SFC is tracing the use of the funds and the identity of any assets owned by or on behalf of Mo and Hui.
The SFC is continuing its investigation and assisting the Commercial Crime Bureau in the case.

Note
1. China Pacific Securities Limited is a company incorporated in Hong Kong and licensed by the SFC to carry on a business in Type 1 regulated activity (dealing in securities) under the Securities and Futures Ordinance (SFO). The proceedings were commenced under section 213 of the SFO.

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