SECURITIES AND FUTURES COMMISSION v. CHIN JONG HWA AND OTHERS

SECURITIES AND FUTURES COMMISSION v. CHIN JONG HWA AND OTHERS

On the agreed facts the respondents’ conduct engaged the court’s jurisdiction under s214 SFO: the Company made false or misleading disclosures and failed to disclose a connected acquisition and related material facts; the 1st Respondent’s conduct (without allegation of dishonesty) warranted a middle‑bracket disqualification of 6 years and a compensation order of RMB 12,000,000 plus interest; the 2nd–4th Respondents’ lesser culpability warranted minimum‑bracket disqualifications of 3 years; the orders accord with regulatory objectives and the Carecraft settlement agreed with the SFC.

Citation
[2019] HKCFI 2735
Parties
Petitioner: SECURITIES AND FUTURES COMMISSION; 1st Respondent: CHIN JONG HWA (秦榮華); 2nd Respondent: SHI JIAN HUI (石建輝); 3rd Respondent: MU WEI ZHONG (穆偉忠); 4th Respondent: ZHAO FENG (趙鋒); 5th Respondent: MINTH GROUP LIMITED; 6th Respondent: DECADE (HK) LIMITED
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
6 November 2019
Case Number
HCMP891/2014
Procedural Posture
Section 214 Petition Under the Securities and Futures Ordinance (misfeasance/connected Transaction) / Judgment on Agreed Facts (carecraft Procedure)
Outcome
Petition allowed to the extent of granting disqualification and compensation orders as agreed between the parties
Legal Topics
Disqualification Orders, Compensation Order, Connected Transactions, Disclosure Obligations, Fiduciary Duties, Misfeasance, Listing Rules Breaches, Carecraft Settlements
Source Language
EN
Securities Law Corporate Law Company Law Regulatory Enforcement Disqualification Orders Compensation Order Connected Transactions Disclosure Obligations +4 more

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Parties

SECURITIES AND FUTURES COMMISSION

Petitioner

CHIN JONG HWA (秦榮華)

1st Respondent

SHI JIAN HUI (石建輝)

2nd Respondent

MU WEI ZHONG (穆偉忠)

3rd Respondent

ZHAO FENG (趙鋒)

4th Respondent

MINTH GROUP LIMITED

5th Respondent

DECADE (HK) LIMITED

6th Respondent

Procedural Posture

Section 214 Petition Under the Securities and Futures Ordinance (misfeasance/connected Transaction) / Judgment on Agreed Facts (carecraft Procedure)

Legal Issues

  1. 1 Whether the conduct of the respondents amounted to conduct involving misfeasance or other misconduct under s214 SFO
  2. 2 Whether disqualification orders are appropriate and their proper duration
  3. 3 Whether a compensation order for readily ascertainable losses is appropriate under s214(2)(e)

Ratio Decidendi

On the agreed facts the respondents’ conduct engaged the court’s jurisdiction under s214 SFO: the Company made false or misleading disclosures and failed to disclose a connected acquisition and related material facts; the 1st Respondent’s conduct (without allegation of dishonesty) warranted a middle‑bracket disqualification of 6 years and a compensation order of RMB 12,000,000 plus interest; the 2nd–4th Respondents’ lesser culpability warranted minimum‑bracket disqualifications of 3 years; the orders accord with regulatory objectives and the Carecraft settlement agreed with the SFC.

Court Disposition

Petition allowed to the extent of granting disqualification and compensation orders as agreed between the parties

Orders

  • Disqualification order against 1st Respondent CHIN JONG HWA for a period of 6 years commencing from the date specified in the Court’s order
  • Disqualification orders against 2nd Respondent SHI JIAN HUI, 3rd Respondent MU WEI ZHONG and 4th Respondent ZHAO FENG each for a period of 3 years commencing from the dates specified in the Court’s order