SECURITIES AND FUTURES COMMISSION v. YIN YINGNENG RICHARD AND OTHERS

SECURITIES AND FUTURES COMMISSION v. YIN YINGNENG RICHARD AND OTHERS

On the balance of probabilities the asserted Mutual Understanding & Agreement did not exist as represented; contemporaneous documents and credibility findings showed the Clarification Announcement was false in a material respect; the Respondents (particularly Yin and Lee, and Wang as beneficiary) acted dishonestly or with such lack of care as to breach fiduciary and statutory duties and thereby conducted the Company's affairs in manner falling within s214(1)(a)-(d); the Court therefore established liability and ordered compensatory and ancillary reliefs, reserved determination of disqualification to a further hearing.

Citation
SECURITIES AND FUTURES COMMISSION v. YIN YINGNENG RICHARD AND OTHERS
Parties
Petitioner: Securities and Futures Commission; 1st Respondent: Yin Yingneng Richard; 2nd Respondent: Lee Yiu Sun; 3rd Respondent: Wang Wen Ming; 4th Respondent: First China Financial Network Holdings Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
16 January 2015
Case Number
HCMP2502/2012
Procedural Posture
Section 214 Petition Under the Securities and Futures Ordinance (cap 571) / Judgment After Trial
Outcome
Petition allowed on liability; SFC's case proven against all Respondents; compensation and ancillary orders made or directed; disqualification to be determined at a further hearing
Legal Topics
Section 214 Petition, Director Disqualification, Misrepresentation in Market Announcement, Misfeasance and Breach of Duty, Compensation and Restitution, Corporate Indemnity, Acquisition and Pre Completion Dividend Distribution
Source Language
EN
Corporate Law Securities Regulation Company Law Directors' Duties Civil Remedies Section 214 Petition Director Disqualification Misrepresentation in Market Announcement +4 more

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Parties

Securities and Futures Commission

Petitioner

Yin Yingneng Richard

1st Respondent

Lee Yiu Sun

2nd Respondent

Wang Wen Ming

3rd Respondent

First China Financial Network Holdings Limited

4th Respondent

Procedural Posture

Section 214 Petition Under the Securities and Futures Ordinance (cap 571) / Judgment After Trial

Legal Issues

  1. 1 Whether the alleged Mutual Understanding & Agreement (MUA) existed as represented in the Clarification Announcement and Letter of Confirmation
  2. 2 Whether the Clarification Announcement contained false or misleading statements in a material particular
  3. 3 Whether the directors (Respondents) breached fiduciary and statutory duties including GEM Listing Rules 5.01 and 5.03 and common law duties of care, skill and diligence

Ratio Decidendi

On the balance of probabilities the asserted Mutual Understanding & Agreement did not exist as represented; contemporaneous documents and credibility findings showed the Clarification Announcement was false in a material respect; the Respondents (particularly Yin and Lee, and Wang as beneficiary) acted dishonestly or with such lack of care as to breach fiduciary and statutory duties and thereby conducted the Company's affairs in manner falling within s214(1)(a)-(d); the Court therefore established liability and ordered compensatory and ancillary reliefs, reserved determination of disqualification to a further hearing.

Court Disposition

Petition allowed on liability; SFC's case proven against all Respondents; compensation and ancillary orders made or directed; disqualification to be determined at a further hearing

Orders

  • Respondents found liable and ordered to compensate the Company for the unlawful distribution (primary responsibility attributed to Wang)
  • Respondents jointly and severally to pay compensation to the Company in respect of RMB18,692,000 paid to the seller, with interest to run from 19 December 2008 (details to follow in draft order paragraph 4)