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HK SFC freezes accounts over alleged market manipulation

BIScom Subsection: 
Author: 
Editorial Staff

The Securities and Futures Commission (SFC) has issued restriction notices to nine brokers, prohibiting them from dealing with or processing certain assets held in their clients’ accounts which are related to suspected market manipulation in the shares of China Ding Yi Feng Holdings Limited (China Ding Yi Feng) between 2018 and early 2019

The SFC is at pains to point out that the nine brokers are not under any suspicion or any form of investigation.

The SFC issued the restriction notices pursuant to sections 204 and 205 of the Securities and Futures Ordinance (SFO).

China Ding Yi Feng, listed under Chapter 21 of the Main Board Listing Rules of The Stock Exchange of Hong Kong Limited on 2 January 2002, was eligible for trading by both Mainland and Hong Kong investors via Shenzhen-Hong Kong Stock Connect. The SFC suspended trading of China Ding Yi Feng’s shares under section 8(1) of the Securities and Futures (Stock Market Listing) Rules with effect from 9:00 am on 8 March 2019 as part of the SFC investigation which started in mid-2018 into the suspicious trading in China Ding Yi Feng’s shares which appeared to create a false market in the company’s shares leading to an irrationally high share price. The SFC’s main concern related to whether an orderly and fair market for China Ding Yi Feng’s shares existed.

The nine brokers are:

- Futu Securities International (Hong Kong) Limited,

- GF Securities (Hong Kong) Brokerage Limited,

- Guotai Junan Securities (Hong Kong) Limited,

- Haitong International Securities Company Limited,

- Orient Securities (Hong Kong) Limited,

- SBI China Capital Financial Services Limited,

- Shenwan Hongyuan Securities (H.K.) Limited,

- Sun Hung Kai Investment Services Limited, and

- Yunfeng Securities Limited.

The SFC is not investigating these brokers, which have cooperated with the SFC’s investigation. The restriction notices do not affect their operations or their other clients.

The restriction notices prohibit them, without the SFC’s prior written consent, from disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with any assets in any way in the client accounts, including:

(i) entering into transactions for any securities; and/or

(ii) processing any withdrawals or transferring of securities and/or cash arising from the disposal of securities; and/or

(iii) disposing of or dealing with any securities or cash on the instructions of any authorized persons of the client accounts or by any persons acting on their behalf; and/or

(iv) assisting another person to dispose of or deal with any relevant property in the client accounts in any manner. The brokers are also required to notify the SFC if they receive any of these instructions.

The SFC considers that the issue of the restriction notices is desirable in the interest of the investing public or in the public interest.

The SFC’s investigation is continuing.

 


 

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