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SFC suspends Wong Ka Ching for four years

Issue date: 2024-05-28 16:10:00

The Securities and Futures Commission (SFC) has suspended Mr Wong Ka Ching, former responsible officer (RO) of China On Securities Limited (China On), for four years from 28 May 2024 to 27 May 2028 (Note 1).

The disciplinary action follows the SFC’s sanctions against China On over its failures as the placing agent in a share placement between 25 November and 6 December 2019 (Note 2).

The SFC considers China On’s failures occurred with Wong’s consent or connivance, or were attributable to neglect on Wong’s part, as an RO and a member of the senior management of China On. The SFC also finds that Wong acted in gross negligence or recklessly in handling the share placement and failed to ensure the maintenance of appropriate standards of conduct and adherence to proper procedures by China On.

The SFC’s investigation found that China On, as placing agent of the then majority shareholder (vendor) of Hon Corporation Limited (Hon Corp) to procure placees to subscribe for 45% of Hon Corp’s total issued share capital, failed to ensure that it acted within the scope of the vendor’s authority and adequately safeguard the vendor’s assets (Notes 3 and 4).

In particular, upon identifying six placees for the placement, China On:

• entered into bought and sold notes relating to the shares on the vendor’s behalf with the placees, but the transaction prices therein were inconsistent with the placing price agreed with the vendor (Note 5);
• transferred the shares to the placees without first requiring payment of the purchase price or the certainty that they would be able to make payment of the placing price to the vendor (Note 6); and
• executed a purported instruction by a third party for part of the shares to be transferred to one of the placees for free without verifying the instruction with the vendor.

In addition, the SFC found that Wong:

• allowed an individual, a purported consultant of China On, to be heavily involved in the operations of China On without ensuring that he was fit and proper or otherwise qualified to act in such capacity;
• disclosed confidential contents of the SFC’s investigation to this individual; and
• knowingly provided false or misleading information to the SFC about the same individual.

In deciding the sanction, the SFC has taken into account all relevant circumstances, including that:

• there is insufficient evidence to support any finding of dishonesty against Wong or the misconduct in question is recurrent;
• Wong’s disclosure of the details about the SFC’s investigation to the above-mentioned individual created a risk of jeopardising the SFC’s investigation;
• the importance of sending a deterrent message to the industry that the SFC will not tolerate any grossly negligent or reckless conduct;
• the gravity of breaches to the secrecy obligation and of providing materially false or misleading information to the SFC, in particular by a licensed person; and
• Wong’s otherwise clean disciplinary record.

End

Notes:

1. Wong was accredited to China On and approved to act as its RO for Type 1 (dealing in securities) regulated activity between 6 April 2017 and 28 February 2021 and Type 9 (asset management) regulated activity between 9 July 2018 and 28 February 2021. Wong is currently not accredited to any licensed corporation.
2. China On (previously known as China Fund Securities Limited) was reprimanded and fined $6 million by the SFC. Please refer to the SFC’s press release dated 18 May 2023.
3. Hon Corp was listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited until its listing status was cancelled with effect from 22 June 2022.
4. Under the placing agreement between China On and the vendor, China On agreed: (a) to procure, as the vendor’s agent, not less than six placees to subscribe for 216 million Hon Corp shares at $0.265 per share (the total agreed placing price amounted to $57.24 million); and (b) when completion takes place, all (but not part only) of a series of businesses shall be transacted, including: (i) China On should pay, or procure the placees to pay, to the vendor the aggregate placing price; and (ii) the vendor should allot the shares to the placees.
5. The bought and sold notes were contract notes executed by the vendor and the respective placees to effect the sale of the shares from the vendor to the respective placees. The bought and sold notes contained the date of sale and purchase and name, quantity and consideration of the stock sold and purchased.
6. On 21 January 2020, the SFC issued a restriction notice to China On, prohibiting it from dealing with assets held in six client accounts, which were related to suspected market manipulation in the shares of Hon Corp. China On was subsequently unable to collect the purchase price from the placees, and failed to pay the same to the vendor. Please see the SFC’s press release dated 21 January 2020.

Source: SFC