The Eastern Magistrates’ Court today granted an application by the Department of Justice to transfer to the District Court the first prosecution of a case for unlicensed dealings involving collective investment schemes (CIS).
The plea hearing at the District Court will take place on 3 February 2015.
On 31 May 2014, the Securities and Futures Commission (SFC) commenced the criminal proceedings at the Eastern Magistrates’ Court against IPFUND Asset Management Limited (IPFUND) and its sole director and shareholder Mr Ronald Sin Chung Yin. Both pleaded not guilty to four summonses on 3 July 2014 (Notes 1 & 2).
The SFC alleged that between February 2011 and December 2011, IPFUND and Sin, both of whom have never been licensed by the SFC, offered and disposed of interests in 16 CIS to investors. IPFUND and Sin managed and controlled those CIS which were not authorized by the SFC.
The funds contributed by the investors were allegedly pooled for use in purchasing commercial properties in Hong Kong; upon the sale of those properties, part of the profit earned would be distributed among the investors in proportion to their contribution towards the purchase price, and IPFUND received consultancy fees based on profits earned from the trading of these commercial properties.
On 4 September 2014, the Eastern Magistrates’ Court gave directions to the SFC to consider whether it would be appropriate for the summonses to be tried in the District Court given the complexity of the subject matter, the number of witnesses and the estimated length of the trial (Note 3).
Notes:
- IPFUND and Sin were accused by the SFC of carrying on a business, or holding out as carrying on a business, in a regulated activity in dealing in securities without a licence in contravention of section 114 of the Securities and Futures Ordinance (SFO). The securities in question are CIS.
- Under section 390 of the SFO, where the commission of an offence under the SFO by a corporation is proved to have been aided, abetted, counselled, procured or induced by, or committed with the consent or connivance of, or attributable to any recklessness on the part of, any officer of the corporation, or any person who was purporting to act in any such capacity, that person, as well as the corporation, is guilty of the offence and is liable to be proceeded against.
- On 24 October 2014, the case was adjourned for four weeks to enable an application to be made by the Department of Justice to transfer the case to the District Court. On 20 November 2014, the case was further adjourned to 13 January 2015.