SECURITIES AND FUTURES COMMISSION v. WONG KAM LEONG AND OTHERS

SECURITIES AND FUTURES COMMISSION v. WONG KAM LEONG AND OTHERS

Section 214 of the SFO is engaged because Long Success (a listed corporation) had its affairs conducted with misconduct, lack of disclosure and unfair prejudice to members. The Relevant Respondents breached duties by negligent oversight, failure to make enquiries, allowing domination by R1, approving prejudicial confirmations and making misleading confirmations to the exchange. Given admissions, mitigation through agreement and the public protection/deterrence aims, disqualification periods as agreed are justified: R3 five years; R6 thirty months (with carve-out); R7 thirty months; R8 two years (with carve-outs); R13 two years; and costs to be paid by respondents apportioned as ordered.

Citation
[2020] HKCFI 606
Parties
Petitioner: Securities and Futures Commission; Respondent: 3rd Respondent; Respondent: 6th Respondent; Respondent: 7th Respondent; Respondent: 8th Respondent; Respondent: 13th Respondent
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
22 April 2020
Case Number
HCMP667/2018
Procedural Posture
Petition Under Section 214 of the Securities and Futures Ordinance (director Disqualification) / Judgment (final Order Made)
Outcome
Disqualification orders granted under s214 SFO against the 3rd, 6th, 7th, 8th and 13th respondents for the durations specified; costs awarded to the SFC to be paid by the respondents and apportioned
Legal Topics
Director Disqualification, Misconduct Under SFO S214, Fiduciary Duties, Duty of Care and Skill, Disclosure Obligations, Carecraft Procedure
Source Language
EN
Company Law Securities Regulation Civil Enforcement Corporate Governance Director Disqualification Misconduct Under SFO S214 Fiduciary Duties Duty of Care and Skill +2 more

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Parties

Securities and Futures Commission

Petitioner

3rd Respondent

Respondent

6th Respondent

Respondent

7th Respondent

Respondent

8th Respondent

Respondent

13th Respondent

Respondent

Procedural Posture

Petition Under Section 214 of the Securities and Futures Ordinance (director Disqualification) / Judgment (final Order Made)

Legal Issues

  1. 1 Whether section 214 SFO is engaged in respect of Long Success and its subsidiaries
  2. 2 Whether the Relevant Respondents breached fiduciary and statutory duties (duty of care, skill and diligence; disclosure; supervision)
  3. 3 Appropriate duration and scope of disqualification orders

Ratio Decidendi

Section 214 of the SFO is engaged because Long Success (a listed corporation) had its affairs conducted with misconduct, lack of disclosure and unfair prejudice to members. The Relevant Respondents breached duties by negligent oversight, failure to make enquiries, allowing domination by R1, approving prejudicial confirmations and making misleading confirmations to the exchange. Given admissions, mitigation through agreement and the public protection/deterrence aims, disqualification periods as agreed are justified: R3 five years; R6 thirty months (with carve-out); R7 thirty months; R8 two years (with carve-outs); R13 two years; and costs to be paid by respondents apportioned as ordered.

Court Disposition

Disqualification orders granted under s214 SFO against the 3rd, 6th, 7th, 8th and 13th respondents for the durations specified; costs awarded to the SFC to be paid by the respondents and apportioned

Orders

  • Pursuant to s214(2)(d) SFO, 3rd Respondent is disqualified for 5 years from acting as director, liquidator, receiver or manager of any corporation in Hong Kong or being concerned in management without leave of the Court (with effect from date of order).
  • Pursuant to s214(2)(d) SFO, 6th Respondent is disqualified for 30 months from acting as director, liquidator, receiver or manager of any corporation in Hong Kong or being concerned in management without leave of the Court, save and except for Sino Prosper Management Limited (carve-out).