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SFC and Police joint operation against a suspect of illegal short selling and fraudulent activities

Issue date: 2023-05-31 16:51:41

The Securities and Futures Commission (SFC) and the Commercial Crime Bureau of the Police conducted a joint search operation today against an individual who is based in Hong Kong and suspected of engaging in illegal short selling and fraudulent activities (Notes 1 & 2).

The individual was arrested by the Police in the joint operation on suspicion of “dealing with property known or believed to represent proceeds of indictable offence”. 

The SFC’s investigation revealed that the individual might have been involved in using fabricated trading statements to mislead two brokerage firms into executing various illegal short sell orders relating to shares of four Hong Kong-listed companies.  The fabricated trading statements showed that the individual held shares in the four listed companies, when in fact he did not (Note 3).  

The suspected short selling took place on six trading days and the total proceeds from selling the shares of the four listed companies reached $17.7 million.  On the same trading days, the individual bought the shares back in the same quantity but at lower prices and obtained illicit profits of approximately $10.5 million.

The SFC’s investigation is ongoing.

End

Notes:

1. The joint search operation was conducted under the arrangement of the Memorandum of Understanding signed between the SFC and the Police.  Please see the SFC's press release dated 25 August 2017.
2. Under section 170(1) of the Securities and Futures Ordinance (SFO), it is an offence for a person to sell securities when he does not have, or does not believe or does not have reasonable grounds to believe that he has a presently exercisable and unconditional right to vest the securities in the purchaser of them.  Under section 300 of the SFO, it is an offence to engage in any act, practice or course of business which is fraudulent or deceptive in a transaction involving securities.
3. One of the four companies is listed on GEM of the Stock Exchange of Hong Kong Limited (SEHK) and the rest are listed on the Main Board of the SEHK. 

News captured as of:2023-05-31 16:51:42

Source: SFC