Hong Kong Court Convicts Former Account Executive of HK Brokerage Fulbright Securities for Share Trading Fraud with $22,000 Profit, Bought Shares at High Price for Client Account & Sold to His Friend Account at Low Price
15th October 2022 | Hong Kong
The Hong Kong court (Eastern Magistrates) has convicted former HK brokerage firm Fulbright Securities account executive (Danny Fung Kwong Shing) for engaging in share trading fraud & deception with $22,000 profit and $6,155 loss to client, buying shares at high price for client account and selling to his friend account at low price (In 2013). Hong Kong SFC: “During the hearing, Fung admitted that between 2 August 2013 and 16 December 2013, he had employed a fraudulent scheme to effect securities transactions in eight stocks between two securities trading accounts under his control. The securities trading accounts belonged to his friend and one of his clients, and he effected the transactions by dishonestly using his client’s funds and securities without authorisation. In essence, the scheme involved different trading patterns – namely, using his client’s funds to buy shares at high prices from the market and selling those shares at low prices to his friend’s account; or using his client’s funds to buy shares at high prices from his friend’s account. These series of transactions resulted in a trading profit of $172,890 to his friend and a loss of $48,321 to his client.” Danny Fung had been remanded in custody pending sentence on 27th October 2022 after pleading guilty to all 25 charges.
“ Hong Kong Court Convicts Former Account Executive of HK Brokerage Fulbright Securities for Share Trading Fraud with $22,000 Profit, Bought Shares at High Price for Client Account & Sold to His Friend Account at Low Price “
In 2017, the Hong Kong Securities & Futures Commission (SFC) had fined Danny Fung HKD 542,071. He was also banned from the financial industry for life, and caused client to suffer losses from around HKD 2.6 million.
Hong Kong SFC Statement
The offences of engaging in fraud or deception in transactions involving securities under the Securities and Futures Ordinance (SFO) in a criminal prosecution brought by the Securities and Futures Commission (SFC) (Notes 1 & 2).
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.
Danny Fung Kwong Shing was licensed to carry on Type 1 (dealing in securities) regulated activity under the SFO. He was accredited to Fulbright Securities Limited during the periods from 1 September 2001 to 23 February 2005 and from 30 July 2008 to 6 November 2014. On 23 November 2017, the SFC banned him from re-entering the industry for life.
SFC fines Danny Fung Kwong Shing and bans him for life, Fined HKD 542,071
In 2017, the Securities and Futures Commission (SFC) has banned Mr Danny Fung Kwong Shing, a former account executive of Fulbright Securities Limited (Fulbright Securities), from re-entering the industry for life and fined him HKD 542,071 (Notes 1 & 2). The disciplinary action follows an SFC investigation which found that between January 2013 and May 2014, Fung had:
- conducted 772 unauthorized transactions in the account of his friend-cum-client, X, at Fulbright Securities;
- fabricated telephone order recordings to mislead Fulbright Securities into believing that the orders for the transactions conducted in X’s account were placed by X; and impersonated another friend-cum-client, Y, and placed orders in Y’s account at Enhanced Securities Limited by telephone.
- The investigation also revealed that at least 53 of the above-mentioned unauthorized transactions were conducted by Fung under a premeditated scheme to secure profits for Y, with the result that Y made profits from these transactions at X’s expense by selling shares to X at prices higher than the purchase prices.
- X suffered a substantial loss of around $2.6 million as a result of all the unauthorized transactions.
The SFC considers that Fung’s conduct was gravely dishonest and that he is not a fit and proper person to be licensed.
Notes:
- The amount of the fine is equivalent to the amount of profit made by Fung for Y and the commission he gained from the unauthorized transactions.
- Fung was licensed to carry on Type 1 (dealing in securities) regulated activity under the Securities and Futures Ordinance. He was accredited to Fulbright Securities during the periods from 1 September 2001 to 23 February 2005 and from 30 July 2008 to 6 November 2014. Fung is currently not licensed by the SFC.
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