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Hong Kong Court to Sentence 3 Individuals on 22nd July 2024 for Manipulating Shares of Ching Lee Holdings & Generating $15.9 Million of Profit in 2016, 3 Individuals Sit Yi Ki, Lam Wing Ki & Tam Cheuk Hang Conspired with Ho Ming Hin, Simon Suen Man & Unknown Persons via 156 Securities Accounts to Create False Appearance of Active Trading & Increase in Trading Volume

18th June 2024 | Hong Kong

The Hong Kong court will be sentencing 3 individuals on 22nd July 2024 after convicting 3 individuals in May 2024 (Sit Yi Ki, Lam Wing Ki & Tam Cheuk Hang) for manipulating shares of Ching Lee Holdings & generating $15.9 million of profit in 2016, with the 3 individuals Sit Yi Ki, Lam Wing Ki & Tam Cheuk Hang conspiring with Ho Ming Hin, Simon Suen Man & unknown persons via 156 securities accounts to create false appearance of active trading & increase in trading volume.  Hong Kong SFC (29/5/24): “The Court of First Instance today convicted three individuals, Ms Sit Yi Ki, Ms Lam Wing Ki and Mr Tam Cheuk Hang of conspiracy to carry out false trading in the shares of Ching Lee Holdings Limited (Ching Lee) following an historic 22-day market manipulation trial by jury.  This is a highly sophisticated and complex market manipulation case and the criminal prosecution was brought by the Department of Justice following extensive investigations by the SFC. This also marks the first time that an offence under the Securities and Futures Ordinance (SFO) has been tried at the Court of First Instance.  The nine-member jury at the Court of First Instance unanimously found Sit and Tam guilty of the charge of conspiracy to commit false trading. The jury also returned a guilty verdict against Lam by majority.  The prosecution stemmed from the SFC’s investigations which revealed that, between March 2016 and September 2016, Sit, Lam and Tam conspired together with Ho Ming Hin, Simon Suen Man and other unknown persons to carry out a complex scheme of market manipulation.  They conspired to maintain an artificial turnover of the shares in Ching Lee by conducting manipulative transactions among 156 securities accounts under their control. This resulted in a false or misleading appearance of active trading and an artificial increase in trading volume for Ching Lee shares. The manipulative trading activities took place over a period lasting for more than five months in 2016 and netted illicit profits of over $124 million (Note 1).  The Court adjourned the case to 17 June 2024 for sentencing. The three defendants applied for bail but their applications were refused by the learned Judge. They are remanded in custody by the Correctional Services Department pending sentencing.  In parallel with the criminal proceedings, the SFC has commenced proceedings under section 213 of the SFO against various local and overseas corporations and individuals, including Sit, Lam and Tam. In this connection, the SFC has obtained an interim injunction order to freeze their assets (Note 2).  The SFC further obtained arrest warrants on 28 August 2020 against Ho and Suen, both of whom had left Hong Kong after the SFC commenced investigations against them. They have been placed under the “Have you seen these people?” on the SFC’s website, and the SFC urges the public to report their whereabouts. Both of them are alleged members of the conspiracy to manipulate shares of Ching Lee (Note 3).”  In November 2023, a Hong Kong Court of Final Appeal (CFA) dismissed an appeal by the Eastmore defendants (Overseas nationals or foreign incorporated companies) to remove court order against them over jurisdiction rights.  In 2019, the Hong Kong SFC (Securities & Futures Commission) had filed civil lawsuit against the syndicate for manipulating shares of Ching Lee Holdings and generating $15.9 million of profit ($124.9 million).    More info below:

“ Hong Kong Court to Sentence 3 Individuals on 22nd July 2024 for Manipulating Shares of Ching Lee Holdings & Generating $15.9 Million of Profit in 2016, 3 Individuals Sit Yi Ki, Lam Wing Ki & Tam Cheuk Hang Conspired with Ho Ming Hin, Simon Suen Man & Unknown Persons via 156 Securities Accounts to Create False Appearance of Active Trading & Increase in Trading Volume “

 



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Hong Kong Court Convicts 3 Individuals of Manipulating Shares of Ching Lee Holdings & Generating $15.9 Million of Profit in 2016, 3 Individuals Sit Yi Ki, Lam Wing Ki & Tam Cheuk Hang Conspired with Ho Ming Hin, Simon Suen Man & Unknown Persons via 156 Securities Accounts to Create False Appearance of Active Trading & Increase in Trading Volume

Hong Kong, Asia’s leading financial centre

30th May 2024 – A Hong Kong court has convicted 3 individuals (Sit Yi Ki, Lam Wing Ki & Tam Cheuk Hang) of manipulating shares of Ching Lee Holdings & generating $15.9 million of profit in 2016, with the 3 individuals Sit Yi Ki, Lam Wing Ki & Tam Cheuk Hang conspiring with Ho Ming Hin, Simon Suen Man & unknown persons via 156 securities accounts to create false appearance of active trading & increase in trading volume.  Hong Kong SFC (29/5/24): “The Court of First Instance today convicted three individuals, Ms Sit Yi Ki, Ms Lam Wing Ki and Mr Tam Cheuk Hang of conspiracy to carry out false trading in the shares of Ching Lee Holdings Limited (Ching Lee) following an historic 22-day market manipulation trial by jury.  This is a highly sophisticated and complex market manipulation case and the criminal prosecution was brought by the Department of Justice following extensive investigations by the SFC. This also marks the first time that an offence under the Securities and Futures Ordinance (SFO) has been tried at the Court of First Instance.  The nine-member jury at the Court of First Instance unanimously found Sit and Tam guilty of the charge of conspiracy to commit false trading. The jury also returned a guilty verdict against Lam by majority.  The prosecution stemmed from the SFC’s investigations which revealed that, between March 2016 and September 2016, Sit, Lam and Tam conspired together with Ho Ming Hin, Simon Suen Man and other unknown persons to carry out a complex scheme of market manipulation.  They conspired to maintain an artificial turnover of the shares in Ching Lee by conducting manipulative transactions among 156 securities accounts under their control. This resulted in a false or misleading appearance of active trading and an artificial increase in trading volume for Ching Lee shares. The manipulative trading activities took place over a period lasting for more than five months in 2016 and netted illicit profits of over $124 million (Note 1).  The Court adjourned the case to 17 June 2024 for sentencing. The three defendants applied for bail but their applications were refused by the learned Judge. They are remanded in custody by the Correctional Services Department pending sentencing.  In parallel with the criminal proceedings, the SFC has commenced proceedings under section 213 of the SFO against various local and overseas corporations and individuals, including Sit, Lam and Tam. In this connection, the SFC has obtained an interim injunction order to freeze their assets (Note 2).  The SFC further obtained arrest warrants on 28 August 2020 against Ho and Suen, both of whom had left Hong Kong after the SFC commenced investigations against them. They have been placed under the “Have you seen these people?” on the SFC’s website, and the SFC urges the public to report their whereabouts. Both of them are alleged members of the conspiracy to manipulate shares of Ching Lee (Note 3).”  In November 2023, a Hong Kong Court of Final Appeal (CFA) dismissed an appeal by the Eastmore defendants (Overseas nationals or foreign incorporated companies) to remove court order against them over jurisdiction rights.  In 2019, the Hong Kong SFC (Securities & Futures Commission) had filed civil lawsuit against the syndicate for manipulating shares of Ching Lee Holdings and generating $15.9 million of profit ($124.9 million).    More info below:

The SFC’s Executive Director of Enforcement, Christopher Wilson: “We welcome the verdicts by the jury. The outcome of this case sends a strong deterrent message on the legal consequence of undermining the integrity of Hong Kong’s securities markets and the confidence of the investing public. It also underscores the SFC’s commitment to holding accountable wrongdoers who seek to abuse our markets for personal gains.  The successful prosecution of these manipulators is the latest in the SFC’s all-out efforts to combat market misconduct and other forms of financial crime in Hong Kong. The SFC has bolstered its investigative capabilities and it will continue to make full use of its statutory powers to mount complex and impactful enforcement actions.”

Notes:

  1. Please see the SFC’s press release dated 13 August 2020 for details.
  2. Please see the SFC’s press releases dated 27 August 2019 and 31 October 2023 for details.
  3. Please see the SFC’s press release dated 31 August 2020 for details. The SFC has added Ho and Suen to the list of individuals subject to arrest warrants under the “Have you seen these people?” on the SFC’s website.

 

 

 

Hong Kong Court Dismissed Appeal by Eastmore Defendants Who are Overseas Nationals or Foreign Incorporated Companies to Remove Court Order Against Them Over Jurisdiction Rights, Hong Kong SFC Filed Civil Lawsuit in 2019 Against the Syndicate for Manipulating Shares of Ching Lee Holdings & Generating $15.9 Million of Profit

Hong Kong, Asia’s leading financial centre

1st November 2023 – The Hong Kong Court of Final Appeal (CFA) has dismissed an appeal by the Eastmore defendants (Overseas nationals or foreign incorporated companies) to remove court order against them over jurisdiction rightsIn 2019, the Hong Kong SFC (Securities & Futures Commission) had filed civil lawsuit against the syndicate for manipulating shares of Ching Lee Holdings and generating $15.9 million of profit ($124.9 million).  Hong Kong SFC: “The Court of Final Appeal (CFA) has unanimously dismissed the appeal by Mr David Subotic, Mr Sasha Szabo, Eastmore Global, Ltd., Eastmore Management, LLC, Eastmore Holdings, Ltd and Current Trading, LLC (collectively, the Eastmore Defendants) concerning service out of the jurisdiction that arose from legal proceedings brought by the Securities and Futures Commission (SFC) in a case of alleged false trading.  In July 2019, the SFC commenced civil proceedings under section 213 of the Securities and Futures Ordinance (SFO) in the Court of First Instance (CFI) against a group of local and overseas traders and investors (Syndicate), including the Eastmore Defendants, who were suspected of manipulating the shares of Ching Lee Holdings Limited (Ching Lee) through a large scale and highly organised scheme (Scheme).  The Scheme generated around $124.9 million of illicit profit for the Syndicate (Note 1).  The Eastmore Defendants are overseas nationals or entities incorporated outside Hong Kong.  The SFC obtained, inter alia, ex parte Mareva injunctions against the Syndicate, and leave for service out of the jurisdiction on the Eastmore Defendants under certain gateways of the Rules of the High Court.  The Eastmore Defendants made several applications to challenge the CFI’s leave for the SFC to serve them out of the jurisdiction (Notes 2 & 3).  On 23 July 2021, the grant of leave for service out of the jurisdiction on the Eastmore Defendants was upheld by the CFI.  Their appeal against the CFI’s decision was dismissed by the Court of Appeal (CA) on 30 December 2022 (Note 4).  The Eastmore Defendants appealed against the CA’s decision to the CFA.  In dismissing the appeal of Eastmore Defendants, the CFA held that leave to serve out of jurisdiction is not required in the present case (Note 5).”  See below for more info:

Hong Kong SFC Executive Director of Enforcement, Christopher Wilson: “We welcome the CFA’s judgment which affirms our power under section 213 of the SFO.  This judgment sends an important message that the SFC will continue to safeguard the collective interests of the investing public.  The SFC will relentlessly pursue enforcement actions to tackle cross-border market misconduct by wrongdoers regardless of where they are.”

 

 

Hong Kong Court Dismissed Appeal by Eastmore Defendants Who are Overseas Nationals or Foreign Incorporated Companies to Remove Court Order Against Them Over Jurisdiction Rights

Hong Kong, Asia’s leading financial centre

31st October 2023 – The Court of Final Appeal (CFA) has unanimously dismissed the appeal by Mr David Subotic, Mr Sasha Szabo, Eastmore Global, Ltd., Eastmore Management, LLC, Eastmore Holdings, Ltd and Current Trading, LLC (collectively, the Eastmore Defendants) concerning service out of the jurisdiction that arose from legal proceedings brought by the Securities and Futures Commission (SFC) in a case of alleged false trading.

  • In July 2019, the SFC commenced civil proceedings under section 213 of the Securities and Futures Ordinance (SFO) in the Court of First Instance (CFI) against a group of local and overseas traders and investors (Syndicate), including the Eastmore Defendants, who were suspected of manipulating the shares of Ching Lee Holdings Limited (Ching Lee) through a large scale and highly organised scheme (Scheme).  The Scheme generated around $124.9 million of illicit profit for the Syndicate (Note 1).
  • The Eastmore Defendants are overseas nationals or entities incorporated outside Hong Kong.  The SFC obtained, inter alia, ex parte Mareva injunctions against the Syndicate, and leave for service out of the jurisdiction on the Eastmore Defendants under certain gateways of the Rules of the High Court.  The Eastmore Defendants made several applications to challenge the CFI’s leave for the SFC to serve them out of the jurisdiction (Notes 2 & 3).
  • On 23 July 2021, the grant of leave for service out of the jurisdiction on the Eastmore Defendants was upheld by the CFI.  Their appeal against the CFI’s decision was dismissed by the Court of Appeal (CA) on 30 December 2022 (Note 4).
  • The Eastmore Defendants appealed against the CA’s decision to the CFA.  In dismissing the appeal of Eastmore Defendants, the CFA held that leave to serve out of jurisdiction is not required in the present case (Note 5).
  • In arriving at the conclusion, the CFA remarked in its judgment that “the SFO’s policy of conferring jurisdiction over persons who engage in false trading “elsewhere” affecting the Hong Kong market is clear and unsurprising.  Trading on the HKEX is global and making sanctions legally available against offshore fraudulent parties who cause losses to investors or other participants in the local market is obviously justified”.
  • The Court also said: “the SFO’s intent is plainly to cater for the territorial dimensions of wrongful acts damaging to market participants. Thus, section s274(1) and section 274(3) cater for false trading when a person “in Hong Kong or elsewhere” does the relevant wrongful acts having an impact on the local market.”   The Court further made clear that section 274 (or other sections of Part XIII of the SFO) are not merely descriptive provisions and are designed to operate in combination with other SFO provisions and should be read and interpreted together (Notes 6 & 7).

Separately, the SFC has commenced criminal proceedings against some of the local Syndicate members for conspiring to carry out false trading in the shares of Ching Lee.  The case will be tried by jury in the CFI on 22 April 2024 (Note 8).

 

 

Notes:

  1. Please see the SFC’s press release dated 27 August 2019.
  2. The Eastmore defendants are either national of Canada or United States, or incorporated in the Cayman Islands, Delaware, USA or the Republic of Seychelles.
  3. By a summons dated 11 November 2019, the Eastmore Defendants sought (i) a declaration that the court had no jurisdiction over them in respect of the subject matter of the claims or relief in the action, (ii) an order that the leave given by the judge be set aside, and (iii) an order that the interim injunction against them be discharged.
  4. The CFI and CA’s judgments dated 23 July 2021 and 30 December 2022 respectively are available on the Judiciary’s website.
  5. Order 11 rule 1(2)(b) of the Rules of the High Court provides that service out of jurisdiction is permissible without leave where a claim made by a writ is one which by virtue of any written law the CFI has power to hear and determine even though a defendant is not within the jurisdiction.  As Order 11 rule 1(2)(b) applies, leave to serve out of jurisdiction is not required in the present case.
  6. According to section 274 of the SFO, false trading takes place when, in Hong Kong or elsewhere, a person does anything or cause anything to be done, with the intention that it has the effect of creating a false or misleading appearance of active trading in the securities or with respect to the market for or the price for dealing in the securities.
  7. The CFA’s judgment dated 30 October 2023 is also available on the Judiciary’s website.
  8. Please see the SFC’s press release dated 13 August 2020.



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