News

Long Hair wins final appeal on prison haircutsJustice is blind, except for haircuts
HK Court of Final Appeal, 27-Nov-2020
The top court unanimously overturns the Court of Appeal's unanimous judgment by (soon to be Chief Justice) Andrew Cheung, Johnson Lam and Jeremy Poon. Male prisoners were not given the same choice as female prisoners over their hair length, and that was sex discrimination. See our article of 1-May-2018 analysing the CA's faulty judgment. First Instance Justice Thomas Au Hing Cheung (now a CA judge) is vindicated.
Ms Chan Shun King, ex-SHK, banned for 2 yearsStatement of Disciplinary Action
SFC, 25-Nov-2020
For discretionary dealing in 2 clients' accounts for 7 years without written authorisation.
Concentration warning in Great Harvest Maeta (3683)
SFC, 23-Nov-2020
The top 20 holders have 96.66%.
Govt adopts part of our CICS proposal - now get it right
Webb-site.com, 22-Nov-2020
3 days after our article last Monday, the HK Govt began talking about a compensation scheme for virus-positive tests, to incentivise self-employed symptomatic people facing loss of income to come forward. But early reports suggest it will be too little and won't apply to close contacts, deterring people who are symptomatic if the close contact is a family member who will be deprived of income while in the quarantine camp. Get it right!
The geo-politics of HK's clunky contact-tracing app
Webb-site.com, 19-Nov-2020
We look at the deceptively-named "LeaveHomeSafe" app, and why it failed to adopt the automated technology worked out by Google and Apple for exposure notifications and instead resorted to a home-brewed QR-scanning system that few will use. The answer may lie in politics.
Webb on "Backchat" re Lantau Tomorrow and our proposal for a COVID Isolation Compensation SchemeCICS
RTHK, 19-Nov-2020
Part 2 on COVID and CICS begins at 47:26. See our article of 16-Nov-2020.
Discover COVID cases with behavioural economics, not force of law
Webb-site.com, 16-Nov-2020
The HK Government has again displayed its authoritarian streak by introducing a mandatory testing law. Instead, citizens and their close contacts should be compensated for as long as they are compulsorily isolated after one of them tests positive. For the self-employed, this would remove a deterrent to seeing a doctor when sick, and thereby also reduce the spread of other diseases.
Independent shareholders veto Tongda Hong Tai (2363) Whitewash Waiver
Webb-site.com, 16-Nov-2020
The largest shareholder wanted to underwrite a 1:1 open offer of new shares, potentially obtaining majority control without making a General Offer. Howel Thomas and his Wykeham Capital Asia Value Fund made sure that didn't happen, using the 75% approval requirement introduced in 2018.
KPMG supports one Country, three singing accountants
Webb-site.com, 12-Nov-2020
But are they tenors? Harmonising in the annual report of Shenwan Hongyuan (6806). Also, HK is "overseas" from PRC - so not part of it then?
image
Credit Suisse fined HK$2.1m for software cock-up causing 8,042 bad option tradesStatement of Disciplinary Action
SFC, 9-Nov-2020
The SDA reveals that a latent bug was introduced into Mercury Direct, the firm's market-making software, in 2013, causing it on 28-Feb-2019 to send options quotes priced for March 2019 but tagged as March 2020. Given the time value of options, these were underpriced and were quickly snapped up by the market, until 7,837 of them were cancelled. The 205 honoured trades caused the firm a loss of US$307k.
SFC cold-shoulders Lisa Ngai Lai Ha, CEO of IHR (1373) for 18 months for breaching Takeovers CodeExecutive Statement
SFC, 2-Nov-2020
She has reached a settlement which avoids a public disciplinary hearing against her, which the SFC launched on 16-Sep-2020.
SFC suspends Sandra Cheung Wing Yi for a yearStatement of Disciplinary Action
SFC, 29-Oct-2020
For dealing through an undisclosed external account. She has since moved on from Mason Securities to Sun Growth Securities.
Concentration warning in C-Link Squared (1463)
SFC, 27-Oct-2020
The stock was listed on 27-Mar-2020. The top 20 holders have 97.39%.
A New Ray of light on an Enigma Network case
Webb-site.com, 26-Oct-2020
A decision quietly posted on the SFAT website reveals that Zhou Ling, ex-Chairman of New Ray Medicine (6108) is suspected by the SFC to have committed "misconduct and obtained secret profits from certain transactions" by NRM. Earlier gazetted Restriction Notices on a client at 2 brokers now make sense - the SFC has reduced disclosure in that area so much as to make the publication meaningless.
AGC, CAD and MAS take action against Goldman Sachs (Singapore) Pte. on 1MDB bond offerings
Monetary Authority of Singapore, 23-Oct-2020
Goldman Sachs (Singapore) Pte will pay US$122m to the Singapore Government and disgorge US$61m to the Malaysian authorities, representing its share of fees from the 1MDB bond offerings.
MAS bans Kevin Michael Swampillai for life
Monetary Authority of Singapore, 23-Oct-2020
SFC fines Goldman Sachs (Asia) LLC US$350m over 1MDB scandalStatement of Disciplinary Action
SFC, 22-Oct-2020
The record fine, which goes to the HK Government, is about HK$364 for every person in HK. The SDA reveals that GS earned an average 9% on the bond issues, way above market rates, and nobody at GS seemed to think that was suspicious. Makes us wonder who was running the compliance department - but such persons are not SFC-licensed, so beyond the SFC's reach. The settlement doesn't suspend GS from carrying on its business in HK.
MMT sanctions CMBC Capital (1141) and 6 ex-directors for late disclosure in 2014
SFC, 16-Oct-2020
The MMT's report will be on its website, one day.
Finding Virtue in the Finance IndustryThe Book
Harvard Business Review, 12-Oct-2020
An article featuring David Webb's work which is covered in JC de Swaan's new book "Seeking Virtue in Finance" from Cambridge University Press.
HK Judge misreads HK company law
HK Court of First Instance, 9-Oct-2020
Justice Linda Chan rejects the Allied Props (0056) privatisation, partly because of the voting headcount. Neither she nor Senior Counsel William Wong, leading 2 more barristers, realise that the headcount on privatisations was scrapped years ago. She also dislikes that part of the payout was coming from Allied Properties itself, and there would be no such dividend if the scheme was rejected. The offer was at a 66% discount to NAV but was 99% approved as minority shareholders again threw in the towel, which says something about the state of corporate governance in HK.
Lai Voon Wai, ex-CCB and BOCOM, loses appeal on 5-year ban for IPO sponsor failuresSFAT Determination
SFC, 30-Sep-2020
Neither of the two IPOs proceeded. The SFAT Determination provides interesting insight into events at BOCOM International (3329) before its own listing in 2017.
SFC fines China Everbright Securities (HK) Ltd HK$2.5mStatement of Disciplinary Action
SFC, 29-Sep-2020
For pledging client securities as collateral for its own credit line from 3 banks in HK.
SFC suspends Mung Wai Sun, ex-Ewarton Securities, for 9 monthsStatement of Disciplinary Action
SFC, 21-Sep-2020
For discretionary dealing for a client without written authorisation, and putting his orders ahead of his client.
SFC fines Bank of East Asia (0023) HK$4.2m for mixing client securities with its ownStatement of Disciplinary Action
SFC, 17-Sep-2020
This practice went on for 13 years before an inspection by the HK Monetary Authority picked it up! By the way, the HK custodian is "Hong Kong Securities Clearing Company Limited", not CCASS, which it operates.
SFC bans Fabian Shin Yick, ex-CEO of Yi Shun Da Capital, for 20 months over IPO sponsor failuresSFAT Ruling
SFC, 16-Sep-2020
The IPO company is unnamed, but we can tell you it is Imperial Sierra Group Holdings Ltd, as mentioned in a procedural ruling from the SFAT, where YSD is appealing the SFC's decision to fine it HK$4.5m and ban it. Also, barrister Norman Nip's briefing fee is HK$50k. The IPO did not proceed, following a report by "Blazing Research" alleging fraud.

Our stories

Govt adopts part of our CICS proposal - now get it right
3 days after our article last Monday, the HK Govt began talking about a compensation scheme for virus-positive tests, to incentivise self-employed symptomatic people facing loss of income to come forward. But early reports suggest it will be too little and won't apply to close contacts, deterring people who are symptomatic if the close contact is a family member who will be deprived of income while in the quarantine camp. Get it right! (22-Nov-2020)
The geo-politics of HK's clunky contact-tracing app
We look at the deceptively-named "LeaveHomeSafe" app, and why it failed to adopt the automated technology worked out by Google and Apple for exposure notifications and instead resorted to a home-brewed QR-scanning system that few will use. The answer may lie in politics. (19-Nov-2020)
Discover COVID cases with behavioural economics, not force of law
The HK Government has again displayed its authoritarian streak by introducing a mandatory testing law. Instead, citizens and their close contacts should be compensated for as long as they are compulsorily isolated after one of them tests positive. For the self-employed, this would remove a deterrent to seeing a doctor when sick, and thereby also reduce the spread of other diseases. (16-Nov-2020)
Independent shareholders veto Tongda Hong Tai (2363) Whitewash Waiver
The largest shareholder wanted to underwrite a 1:1 open offer of new shares, potentially obtaining majority control without making a General Offer. Howel Thomas and his Wykeham Capital Asia Value Fund made sure that didn't happen, using the 75% approval requirement introduced in 2018. (16-Nov-2020)
KPMG supports one Country, three singing accountants
But are they tenors? Harmonising in the annual report of Shenwan Hongyuan (6806). Also, HK is "overseas" from PRC - so not part of it then? (12-Nov-2020)
image
A New Ray of light on an Enigma Network case
A decision quietly posted on the SFAT website reveals that Zhou Ling, ex-Chairman of New Ray Medicine (6108) is suspected by the SFC to have committed "misconduct and obtained secret profits from certain transactions" by NRM. Earlier gazetted Restriction Notices on a client at 2 brokers now make sense - the SFC has reduced disclosure in that area so much as to make the publication meaningless. (26-Oct-2020)
A special message from our Founder
Unfortunately, there are going to be some changes around here. (8-Jun-2020)
Government misled LegCo over COVID-19 broker handout
Applying to the Finance Committee, the Government made claims which it knew or should have known were false and misleading. It was either lying or reckless. Webb-site tells you the truth. (1-May-2020)
Non-dispersable gatherings
We hereby "sternly clarify" that the Police and Secretary for Justice are wrong to claim that groups of 4 standing more than 1.5 metres apart constitute a single gathering if they have a common purpose. The Group Gathering Regulation allows for multiple, non-dispersable gatherings and contain no reference to the purpose of participants. We also show how to optimise use of available space. (28-Apr-2020)
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COVID-19: where do we go from here?
HK is essentially clean: data indicate the latest community transmission was 24 days ago. A potential travel network of clean quarantined countries is emerging, but many others are pursuing a mitigation approach, flattening the curve but leading to the likely premature death of 0.5% of their populations unless interrupted by a vaccine or treatment. We find lessons to be learned from HK's early mistakes. HK should maintain its quarantine and its people should now be free to enjoy their city. (27-Apr-2020)
CPG interference: HK's Ministry of Truth on Article 22
In an act straight out of George Orwell's 1984, the HK Govt's news agency has been caught modifying and backdating a press release to comply with the Central People's Government's Liaison Office view that it is not a CPG department and not subject to Article 22 of the Basic Law. It actually makes no difference: if the CPG itself interferes in matters which are within HK's autonomy under the Basic Law, then it undermines "Two Systems". (20-Apr-2020)
HK employers must eat this free lunch
An economically illiterate leadership has decided to spray HK$80bn at HK's economy, benefitting employers who had no intention of making lay-offs, by paying the firms up to HK$54k per job. Some firms have even prospered during COVID-19. It's a wasteful way to return hoarded reserves to the economy, but all companies now have a legal duty to shareholders to eat this free lunch. They should resist any Government pressure to not collect it. (9-Apr-2020)
HK Government has no power to suspend school classes
As class suspensions drag into a third month, we look at who exactly is responsible. Surprise: it's not the Government, which can only advise, and it's now time for schools and their governing bodies to take the lead and learn from the parallel case of Singapore, where schools have remained open without causing an outbreak. We also call on HK to ban non-resident arrivals, and look at what other countries must do, or suffer, to get COVID-19 under control. (22-Mar-2020)
Carrie Lam risks international travel ban on HK residents
Once again Mrs Lam is putting "One Country" ahead of "Two Systems". By keeping a porous border while imposing an unprecedented lockdown within HK, we risk an escalation of confirmed cases of 2019-nCoV and a consequent inclusion in the entry bans now imposed by Singapore and USA which other countries are likely to follow. Mrs Lam, stand up for Hong Kong. (1-Feb-2020)
Getting to 601: How Beijing controls the HK Chief Executive election
Carrie Lam continues to peddle the lie that the Chief Executive Election Committee is "broadly representative", often unchallenged by foreign media. We explain exactly how it is rigged, and how with enough political courage, she could unrig it and introduce democracy through local legislation, without Beijing's approval. (28-Jan-2020)

Other news

Long Hair wins final appeal on prison haircutsJustice is blind, except for haircuts
HK Court of Final Appeal, 27-Nov-2020
The top court unanimously overturns the Court of Appeal's unanimous judgment by (soon to be Chief Justice) Andrew Cheung, Johnson Lam and Jeremy Poon. Male prisoners were not given the same choice as female prisoners over their hair length, and that was sex discrimination. See our article of 1-May-2018 analysing the CA's faulty judgment. First Instance Justice Thomas Au Hing Cheung (now a CA judge) is vindicated.
Ms Chan Shun King, ex-SHK, banned for 2 yearsStatement of Disciplinary Action
SFC, 25-Nov-2020
For discretionary dealing in 2 clients' accounts for 7 years without written authorisation.
Concentration warning in Great Harvest Maeta (3683)
SFC, 23-Nov-2020
The top 20 holders have 96.66%.
Webb on "Backchat" re Lantau Tomorrow and our proposal for a COVID Isolation Compensation SchemeCICS
RTHK, 19-Nov-2020
Part 2 on COVID and CICS begins at 47:26. See our article of 16-Nov-2020.
Credit Suisse fined HK$2.1m for software cock-up causing 8,042 bad option tradesStatement of Disciplinary Action
SFC, 9-Nov-2020
The SDA reveals that a latent bug was introduced into Mercury Direct, the firm's market-making software, in 2013, causing it on 28-Feb-2019 to send options quotes priced for March 2019 but tagged as March 2020. Given the time value of options, these were underpriced and were quickly snapped up by the market, until 7,837 of them were cancelled. The 205 honoured trades caused the firm a loss of US$307k.
SFC cold-shoulders Lisa Ngai Lai Ha, CEO of IHR (1373) for 18 months for breaching Takeovers CodeExecutive Statement
SFC, 2-Nov-2020
She has reached a settlement which avoids a public disciplinary hearing against her, which the SFC launched on 16-Sep-2020.
SFC suspends Sandra Cheung Wing Yi for a yearStatement of Disciplinary Action
SFC, 29-Oct-2020
For dealing through an undisclosed external account. She has since moved on from Mason Securities to Sun Growth Securities.
Concentration warning in C-Link Squared (1463)
SFC, 27-Oct-2020
The stock was listed on 27-Mar-2020. The top 20 holders have 97.39%.
AGC, CAD and MAS take action against Goldman Sachs (Singapore) Pte. on 1MDB bond offerings
Monetary Authority of Singapore, 23-Oct-2020
Goldman Sachs (Singapore) Pte will pay US$122m to the Singapore Government and disgorge US$61m to the Malaysian authorities, representing its share of fees from the 1MDB bond offerings.
MAS bans Kevin Michael Swampillai for life
Monetary Authority of Singapore, 23-Oct-2020
SFC fines Goldman Sachs (Asia) LLC US$350m over 1MDB scandalStatement of Disciplinary Action
SFC, 22-Oct-2020
The record fine, which goes to the HK Government, is about HK$364 for every person in HK. The SDA reveals that GS earned an average 9% on the bond issues, way above market rates, and nobody at GS seemed to think that was suspicious. Makes us wonder who was running the compliance department - but such persons are not SFC-licensed, so beyond the SFC's reach. The settlement doesn't suspend GS from carrying on its business in HK.
MMT sanctions CMBC Capital (1141) and 6 ex-directors for late disclosure in 2014
SFC, 16-Oct-2020
The MMT's report will be on its website, one day.
Finding Virtue in the Finance IndustryThe Book
Harvard Business Review, 12-Oct-2020
An article featuring David Webb's work which is covered in JC de Swaan's new book "Seeking Virtue in Finance" from Cambridge University Press.
HK Judge misreads HK company law
HK Court of First Instance, 9-Oct-2020
Justice Linda Chan rejects the Allied Props (0056) privatisation, partly because of the voting headcount. Neither she nor Senior Counsel William Wong, leading 2 more barristers, realise that the headcount on privatisations was scrapped years ago. She also dislikes that part of the payout was coming from Allied Properties itself, and there would be no such dividend if the scheme was rejected. The offer was at a 66% discount to NAV but was 99% approved as minority shareholders again threw in the towel, which says something about the state of corporate governance in HK.
Lai Voon Wai, ex-CCB and BOCOM, loses appeal on 5-year ban for IPO sponsor failuresSFAT Determination
SFC, 30-Sep-2020
Neither of the two IPOs proceeded. The SFAT Determination provides interesting insight into events at BOCOM International (3329) before its own listing in 2017.
SFC fines China Everbright Securities (HK) Ltd HK$2.5mStatement of Disciplinary Action
SFC, 29-Sep-2020
For pledging client securities as collateral for its own credit line from 3 banks in HK.
SFC suspends Mung Wai Sun, ex-Ewarton Securities, for 9 monthsStatement of Disciplinary Action
SFC, 21-Sep-2020
For discretionary dealing for a client without written authorisation, and putting his orders ahead of his client.
Previously on Webb-site.com
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