SECURITIES AND FUTURES COMMISSION v. YEUNG CHUNG LUNG AND OTHERS

SECURITIES AND FUTURES COMMISSION v. YEUNG CHUNG LUNG AND OTHERS

The court concluded on the evidence (and absence of any explanation) that the 1st-3rd respondents committed false accounting, embezzlement and obstructive conduct amounting to defalcation, fraud and misfeasance engaging s214(1)(b),(c) and (d); therefore disqualification orders and a restitution order against the 1st respondent were appropriate, together with indemnity costs to the SFC.

Citation
SECURITIES AND FUTURES COMMISSION v. YEUNG CHUNG LUNG AND OTHERS
Parties
Petitioner: Securities and Futures Commission; 1st Respondent: Yeung Chung Lung; 2nd Respondent: Yang Le; 3rd Respondent: Ni Chao Peng; 4th Respondent (company): First Natural Foods Holdings Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
17 February 2017
Case Number
HCMP205/2013
Procedural Posture
SFC Petition Under Section 214 Securities and Futures Ordinance / Judgment (hearing 11 January 2017; Judgment Delivered 17 February 2017)
Outcome
Petition allowed in part: liability under s214(1)(b),(c) and (d) proven against 1st-3rd respondents; disqualification and restitution ordered against 1st respondent; disqualification ordered against 2nd and 3rd respondents; costs to SFC on indemnity; no order as to Company costs.
Legal Topics
Section 214 SFO, Director Disqualification, Embezzlement, False Accounting, Misfeasance, Obstruction of Provisional Liquidators, Restitution to Assignee
Source Language
EN
Company Law Securities Regulation Insolvency Law Directors' Duties and Disqualification Civil Fraud/remedies Section 214 SFO Director Disqualification Embezzlement +4 more

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Parties

Securities and Futures Commission

Petitioner

Yeung Chung Lung

1st Respondent

Yang Le

2nd Respondent

Ni Chao Peng

3rd Respondent

First Natural Foods Holdings Limited

4th Respondent (company)

Procedural Posture

SFC Petition Under Section 214 Securities and Futures Ordinance / Judgment (hearing 11 January 2017; Judgment Delivered 17 February 2017)

Legal Issues

  1. 1 Whether the 1st-3rd respondents' conduct amounted to defalcation, fraud or misfeasance under s214(1)(b) SFO
  2. 2 Whether shareholders were deprived of information under s214(1)(c) SFO
  3. 3 Whether conduct was oppressive under s214(1)(a) SFO

Ratio Decidendi

The court concluded on the evidence (and absence of any explanation) that the 1st-3rd respondents committed false accounting, embezzlement and obstructive conduct amounting to defalcation, fraud and misfeasance engaging s214(1)(b),(c) and (d); therefore disqualification orders and a restitution order against the 1st respondent were appropriate, together with indemnity costs to the SFC.

Court Disposition

Petition allowed in part: liability under s214(1)(b),(c) and (d) proven against 1st-3rd respondents; disqualification and restitution ordered against 1st respondent; disqualification ordered against 2nd and 3rd respondents; costs to SFC on indemnity; no order as to Company costs.

Orders

  • Disqualification order against the 1st respondent (Yeung Chung Lung) for 12 years
  • Disqualification orders against the 2nd respondent (Yang Le) and 3rd respondent (Ni Chao Peng) for 8 years each