Hong Kong Securities And Futures Commission Obtains Arrest Warrant For Suspected Market Manipulator And Interim Injunction To Freeze His Assets In Hong Kong Up To $3,158,400

The Eastern Magistrates’ Court has issued a warrant for Mr Liu Shaolin’s arrest, directing that Liu be brought before the Court to answer four charges of false trading in the shares of Pak Wing Group Holdings Limited (Pak Wing) (Notes 1 and 2).

The Court made the order for Liu’s arrest following an application made by the Securities and Futures Commission (SFC).

The SFC alleged that Liu pushed up the share price of Pak Wing by “marking-the-close” activities in May and June 2018 (Note 3). Liu subsequently disposed of some of his Pak Wing shares in June 2018 and made an illicit profit of around $2,900,000.

In parallel, the SFC has commenced civil proceedings in the Court of First Instance under section 213 of the SFO against Liu to seek for, inter alia, an order to restore affected counterparties to their pre-transaction positions.

On 13 December 2024, the Court of First Instance granted an interim injunction order against Liu to freeze his assets in Hong Kong up to the value of $3,158,400. The interim injunction order would ensure that there are sufficient assets to meet any restorative or compensation order which the Court may make if Liu is found to be in contravention of the relevant provisions of the SFO.

On 19 February 2025, the interim injunction order was discharged after Liu paid $3,158,400 into Court as security until final determination of the proceedings or further order of the Court (Note 4).

Notes:

1. False trading constitutes an offence contrary to section 295 of the Securities and Futures Ordinance (SFO).
2. The shares of Pak Wing (currently known as China Hongbao Holdings Limited) were listed on the Main Board of The Stock Exchange of Hong Kong Limited on 10 August 2015.
3. “Marking-the-close” activities refer to placing of orders to buy or sell shares near the market close in an attempt to influence the closing price. In this case, Liu placed orders to buy shares at prices higher than the prevailing market prices near the market close which increased the closing price.
4. The SFC issued restriction notices on 17 September 2018 under sections 204 and 205 of the SFO to freeze the profits made by Liu. The restriction notices were uplifted on 17 April 2025.