News

HKICPA bans Sunny Yan Kwok Ting for 5 years
HKICPA, 8-Jun-2018
This relates to alleged lying to the SFC during 2006 in an investigation of Core Pacific-Yamaichi's 2002 sponsorship of Tungda Innovative Lighting.
4 charged with using smartphones to get confidential questions on HK secondary school Chinese exams
ICAC, 4-Jun-2018
All the charges involve allegedly "obtaining access to computers with dishonest intent" - in this case, smartphones, presumably to transmit photos of exam questions and other material. Modern Education (HK) Ltd is a 100% subsidiary of HK Education (1082) which featured in our "Enigma Network" last year.
Short positions in Samsonite (1910)
Webb-site.com, 1-Jun-2018
The latest aggregate short positions show a sharp increase of 16.62m shares in the week to 18-May followed by a decrease of 11.91m shares in the week to 25-May. The critical report by Soren Aandahl's Blue Orca Capital was published on 24-May.
CE appoints invisible people to Amusement Games Centre Appeal BoardChinese
HK Gazette, 1-Jun-2018
The Chinese version has 8 names. The English version - well obviously nobody cares. Update 2018-06-16: this has now been fixed, following a Webb-site complaint to the Gazette.
Leung Chun Kwong v Secretary for the Civil Service & anotherSDO Section 7
HK Court of Appeal, 1-Jun-2018
The CA overturns the CFI decision granting Mr Leung benefits for his same-sex partner/spouse and upholds the decision denying him joint assessment for tax. The bigger question, regardless of sexual orientation, is this: why does the Government grant benefits based on marital status in the first place, and is that legal? The Sex Discrimination Ordinance, Section 7(1), prohibits discrimination based on marital status. Employees of equal rank and performance should not have different value of remuneration based on marital status. Mr Leung's complaint was that he did not qualify for discriminatory treatment in favour of married people, but why is there any such discrimination?
Censure of Mr Gangkhuyag Chultemsuren, ex-IR Resources (8186)
SEHK, 31-May-2018
For failing to co-operate with an investigation. He resigned on 14-May-2015. IR Resources featured in our "Enigma Network" last year.
Concentration warning in ISP Global (8487)
SFC, 30-May-2018
19 holders have 94.37% of the company.
SFC fines Noah HK$5m for flood of "potentially unsuitable investment products"
SFC, 29-May-2018
757 clients in 1243 transactions bought US$523m of the products.
HKSAR v Lew Mon Hung
HK Court of Appeal, 25-May-2018
Mr Lew is granted leave to appeal to the Court of Final Appeal on a point of "great and general public importance". The angle appears to be: does the Commissioner of the ICAC have discretion, or is he duty-bound to investigate alleged or suspected offences? Does the CE of HK have the ability to direct or override him? If neither is true, then the argument would be that Mr Lew, by writing to then CE C Y Leung, could not have had any impact on his case, and therefore was not attempting to pervert the course of justice. Lots of ifs. The CFA will now decide.
Haitong (0665) gets Mr Cheung Chi Mang declared bankrupt
HK Court of First Instance, 21-May-2018
The former Chairman of Pak Tak (2668) guaranteed the debts of Hong Kong Investments Group Ltd to Haitong International Finance Co Ltd, then defaulted.
China Longyuan Power (0916): we appointed the wrong auditor
Company announcement, 18-May-2018
Following a Webb-site complaint to HKEX, it emerges that instead of appointing Ernst & Young Hua Ming LLP (of mainland China) at last year's AGM, they meant to appoint Ernst & Young (HK), which signed the 2017 audit report. We have also filed complaints with the HKICPA and Financial Reporting Council, because a HK firm shouldn’t sign an audit report when it hasn't been appointed. The two firms are legally separate.
Shareholders veto General Issue Mandate at Techtronic (0669)
Company announcement, 18-May-2018
In a rare victory, outside shareholders overcome management's support for their own mandate. Although the basic issue mandate was restricted to 5% for cash placings at a 5% discount, the opposition was likely due to the seeking of an extension of the mandate to cover repurchased shares, giving management the ability to allot up to 15% in total. Outsiders also almost unseated INED Christopher Langley, who was re-elected by 53%:47%. He's been an INED for 17 years and clearly doesn't have a mandate from independent shareholders.
DAB wants public money to help private property owners to maintain their buildings.HAD Building Management
RTHK, 18-May-2018
Why should property owners get a hand-out? Those who own property should maintain it. If they have no cash, they can either sell it and rent somewhere else, or get a mortgage or (if elderly) a reverse mortgage. If they lack an Owners' Corporation for the building, the Home Affairs Department will help them set one up.
SFC fines Citigroup HK$57m for Real Gold (0246) sponsor failures
SFC, 17-May-2018
Well that took a while. Over 9 years after the IPO, and with the stock about to celebrate its 7th anniversary of being suspended, a settlement is reached with the sponsor. Not one that will help investors though - there does not appear to be any admission of liability by Citgroup to investors and even if there were, HK has no class action system.
Lynne Rowlands v Registrar of Companies & another
HK Court of First Instance, 17-May-2018
Ms Rowlands was deceived by suspected fraudsters into sending GBP 55,971 to the HK HSBC bank account of Marcel Network Ltd in 3 transfers in May-Aug-2014. After that, HSBC froze the account and the company was struck off on 17-Apr-2015. As there is still money in the account, Ms Rowlands has successfully applied to restore the company to the register so that she can make her claim against it.
Frederick Sum Mun Kid v Auto Italia Ltd & others
HK Court of First Instance, 16-May-2018
A dispute over the purchase of 2 Ferraris. Mr Sum "holds the prestigious status with Ferrari of a Very Very Important Person, (VVIP)".
SFC takes Magic Holdings (delisted) and its directors to MMT
SFC, 15-May-2018
The SFC alleges that the respondents failed to promptly disclose Inside Information on the L'Oreal takeover talks after it began leaking to the market, causing a gradual escalation of the price. If the SFC succeeds, those who sold early without the benefit of that information may bring claims against the respondents for compensation. Meanwhile, we wonder whether the SFC will unmask anyone who dealt on the information.

Our stories

Short positions in Samsonite (1910)
The latest aggregate short positions show a sharp increase of 16.62m shares in the week to 18-May followed by a decrease of 11.91m shares in the week to 25-May. The critical report by Soren Aandahl's Blue Orca Capital was published on 24-May. (1-Jun-2018)
Why HK has no retail bond market
The HK Government's Pilot Bond Grant Scheme is needless corporate welfare and deflects from the real problem: by protecting bank profits from competition for funding and effectively excluding retail investors, the Government and HKMA are preventing a liquid, exchange-traded bond market from emerging. We explain what they need to do instead. (13-May-2018)
Justice is blind, except for haircuts
The Court of Appeal rules that a prison order requiring men to have short hair and allowing women to choose is not discriminatory, because of societal norms for haircuts. We find substantial flaws in this reasoning. We also find that the UK rule which HK inherited was amended by 1999 to remove the discrimination, something that Long Hair's lawyers appear to have overlooked. (1-May-2018)
Carrie Lam's latest assault on free markets
The Government is threatening to broaden rather than repeal a restriction on the resale of event tickets in HK, a restriction which is probably unconstitutional anyway. This runs against the interests of event organisers and performers who benefit from the secondary market as we explain. It also runs against the broader public interest in consumer choice. Let the market function, and repeal section 6 of the POPE Ordinance. What next - a restriction on reselling wine or IPO shares for a profit? (17-Apr-2018)
Exclusive: HK Government to launch "Christian Bonds"
Webb-site has learned of secret plans to turn Hong Kong into a Christian Finance hub, and of course, they are launching it on Easter Sunday. (1-Apr-2018)
Solving the MPF-LSP offset problem, again
The HK Government fails to identify the obvious solution and instead pursues a doomed approach of perpetuating MPF plus LSP. That will either result in taxpayers fully funding a windfall to existing employees or the Government losing a judicial review for overriding the implied terms of existing employment contracts and violating employers' legitimate expectation of not having to pay twice. (30-Mar-2018)
Respect, the national anthem and the Basic Law
By imposing the National Anthem Law on HK, the CPG seeks to command rather than earn respect. It will trigger another constitutional test of the freedoms promised in the Basic Law as soon as the first international HK soccer match after the law is passed kicks off. We also find a 1941 recording, 8 years before the song became an anthem, including a translation that Beijing would not regard as politically correct today. March on! (25-Mar-2018)
Facebook, Big Brother and China
The political and media furore over external use of Facebook data misses the point. Facebook, Google and other internet giants know far more about their users than any app developer ever will. Facebook offers its own political ad-targeting service based on its analysis of users' data, just part of its over US$40bn of annual monetisation of users through advertising. It's a price that users appear willing to pay for the services, but in authoritarian states like China, with it's pending "Social Credit System" that poses a far bigger threat to society. (23-Mar-2018)
Kingston (1031): things you should know
Even after today's plunge, Kingston is trading at 13.2x net tangible assets of $0.508 per share, 70.8x trailing earnings, and is heavily dependent on low-cost loans from its majority shareholder. Don't bet on that continuing. We also look at the extent of its margin lending to controlling shareholders of large numbers of other listed companies. (30-Jan-2018)
Your stocks, your way
We're launching new features for registered users. Build your own stock list, use a dashboard to find information on the stocks, and see CCASS movements, total returns and directors' dealings for your stocks in one page. And yes, it's all free! We also encourage users to give something back to the community by anonymously contributing your Governance Ratings of companies and Trust Ratings of people. (24-Jan-2018)
Total returns on the worst 5 HSI stocks you could've bought on 30-Oct-2007
With the HSI possibly soon to close at a daily record nominal high (ex-dividends), here's a look at the total return (including reinvestment of dividends) on the worst 5 then-index members you could have bought on 30-Oct-2007, the previous daily high. Esprit (0330) was the market darling of its time - rather like Tencent (0700) is today. Esprit has since returned -95.48% up to 12-Jan-2018. (15-Jan-2018)
The wrong way to pay civil servants
A new ICAC case reminds us that the Government and public sector get bad value for taxpayers and lose good people by paying time-limited benefits that are based on irrelevant factors rather than the value of their services. Scrap all the benefits schemes and pay people what they are worth. At the same time, remove the housing loophole from salaries tax, raise personal allowances and bring down the tax rate to compensate. (13-Jan-2018)
Webb-site Who's Who covers HK solicitors
After a lot of coding over Christmas pudding and more than a dash of brandy butter, we are pleased to launch a new section of our database, monitoring HK lawyers. Now you can answer questions such as: Which are the biggest law firms? Who is the longest-practising solicitor? Who moved jobs this month? How many were admitted in other jurisdictions before or after HK? How many HK solicitors work for the SFC? (12-Jan-2018)
Belts and Burqas
Shortly before Christmas, the HK Financial Secretary announced the birth of the first Belt and Road bond in HK, the latest in a line of financial gimmicks designed to avoid meaningful regulatory reforms. (10-Jan-2018)

Other news

HKICPA bans Sunny Yan Kwok Ting for 5 years
HKICPA, 8-Jun-2018
This relates to alleged lying to the SFC during 2006 in an investigation of Core Pacific-Yamaichi's 2002 sponsorship of Tungda Innovative Lighting.
4 charged with using smartphones to get confidential questions on HK secondary school Chinese exams
ICAC, 4-Jun-2018
All the charges involve allegedly "obtaining access to computers with dishonest intent" - in this case, smartphones, presumably to transmit photos of exam questions and other material. Modern Education (HK) Ltd is a 100% subsidiary of HK Education (1082) which featured in our "Enigma Network" last year.
CE appoints invisible people to Amusement Games Centre Appeal BoardChinese
HK Gazette, 1-Jun-2018
The Chinese version has 8 names. The English version - well obviously nobody cares. Update 2018-06-16: this has now been fixed, following a Webb-site complaint to the Gazette.
Leung Chun Kwong v Secretary for the Civil Service & anotherSDO Section 7
HK Court of Appeal, 1-Jun-2018
The CA overturns the CFI decision granting Mr Leung benefits for his same-sex partner/spouse and upholds the decision denying him joint assessment for tax. The bigger question, regardless of sexual orientation, is this: why does the Government grant benefits based on marital status in the first place, and is that legal? The Sex Discrimination Ordinance, Section 7(1), prohibits discrimination based on marital status. Employees of equal rank and performance should not have different value of remuneration based on marital status. Mr Leung's complaint was that he did not qualify for discriminatory treatment in favour of married people, but why is there any such discrimination?
Censure of Mr Gangkhuyag Chultemsuren, ex-IR Resources (8186)
SEHK, 31-May-2018
For failing to co-operate with an investigation. He resigned on 14-May-2015. IR Resources featured in our "Enigma Network" last year.
Concentration warning in ISP Global (8487)
SFC, 30-May-2018
19 holders have 94.37% of the company.
SFC fines Noah HK$5m for flood of "potentially unsuitable investment products"
SFC, 29-May-2018
757 clients in 1243 transactions bought US$523m of the products.
HKSAR v Lew Mon Hung
HK Court of Appeal, 25-May-2018
Mr Lew is granted leave to appeal to the Court of Final Appeal on a point of "great and general public importance". The angle appears to be: does the Commissioner of the ICAC have discretion, or is he duty-bound to investigate alleged or suspected offences? Does the CE of HK have the ability to direct or override him? If neither is true, then the argument would be that Mr Lew, by writing to then CE C Y Leung, could not have had any impact on his case, and therefore was not attempting to pervert the course of justice. Lots of ifs. The CFA will now decide.
Haitong (0665) gets Mr Cheung Chi Mang declared bankrupt
HK Court of First Instance, 21-May-2018
The former Chairman of Pak Tak (2668) guaranteed the debts of Hong Kong Investments Group Ltd to Haitong International Finance Co Ltd, then defaulted.
China Longyuan Power (0916): we appointed the wrong auditor
Company announcement, 18-May-2018
Following a Webb-site complaint to HKEX, it emerges that instead of appointing Ernst & Young Hua Ming LLP (of mainland China) at last year's AGM, they meant to appoint Ernst & Young (HK), which signed the 2017 audit report. We have also filed complaints with the HKICPA and Financial Reporting Council, because a HK firm shouldn’t sign an audit report when it hasn't been appointed. The two firms are legally separate.
Previously on Webb-site.com
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