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The Securities and Futures Commission (SFC) and the Commercial Crime Bureau of the Police today conducted a joint operation against suspected bogus transactions involving a company formerly listed on the Stock Exchange of Hong Kong Limited (SEHK).
Eight people, including the company’s current and former executive directors and senior executives, were arrested in the joint operation, which followed an SFC’s referral to the Police on suspected fraud that occurred before the company was delisted. The joint operation also involved a search of various offices and residences of the arrestees and other relevant parties (Note 1).
The SFC is investigating into whether the company’s management had caused it to enter into various bogus transactions amounting to over $130 million and published false or misleading announcements and financial statements to cover up the fraud.
The suspected bogus transactions involved a loan the company granted to a related party and some payments and prepayments it made to suppliers for goods or services. But the company did not appear to have received the goods or services it had paid for and a substantial part of the money it had paid went to its related parties instead of the suppliers.
No further comment will be made at this stage as investigations are still ongoing.
The SFC will continue to work closely with the Police to tackle the misconduct of listed companies to protect the investing public and maintain the integrity of Hong Kong’s financial markets.
Note:
- The joint operation was conducted under the arrangement of the Memorandum of Understanding signed between the SFC and the Police. Please see the SFC's press release dated 25 August 2017.
