The Securities and Futures Commission (SFC) today warns the public of Facebook advertisements paid by Alpha Advice in relation to a suspicious investment product “Litigation Asset-Backed Notes” or “90-Day Notes”.
The Facebook advertisements for “Litigation Asset-Backed Notes” or “90-Day Notes”, which appear to be targeting Hong Kong investors, contain references to the common features of debentures. The SFC did not authorise the advertisements under the Securities and Futures Ordinance (SFO) and they may constitute “prospectuses” under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (CWUMPO) without the SFC’s authorisation for registration under the CWUMPO. This led the SFC to suspect that the issue of these advertisements may have breached the SFO and/or the CWUMPO (Notes 1 to 3).
“Litigation Asset-Backed Notes” or “90-Day Notes” and its related details were posted on the SFC’s Suspicious Investment Products Alert List on 19 December 2024.
The SFC urges the public not to invest in any securities (including debentures) without a document authorised by the SFC for registration and/or issue, where appropriate. The public should also be vigilant and sceptical about “too-good-to-be-true” investment opportunities when making investment decisions.
The SFC will take all appropriate actions where there is any breach of the law.
Notes:
- It is an offence under section 103 of the SFO for a person to issue, whether in Hong Kong or elsewhere, an advertisement, invitation or document which to his knowledge is or contains an invitation to the Hong Kong public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities (which include debentures), unless the issue has been authorised by the SFC or an exemption applies.
- It is an offence under section 114 of the SFO for a person to carry on or hold himself out as carrying on a business in a regulated activity (which will include promoting securities) without a licence where required. It is also an offence under section 115 of the SFO for a person to actively market, whether in Hong Kong or from a place outside Hong Kong, to the Hong Kong public any services that he provides and such services, if provided in Hong Kong, would constitute a regulated activity.
- Any document (including an advertisement) offering debentures of a company to the public for subscription or purchase, or calculated to invite offers by the public to subscribe for or purchase debentures of a company, may constitute a “prospectus” under section 2 of the CWUMPO. Pursuant to section 38D of the CWUMPO, no prospectus shall be issued by or on behalf of a company unless the prospectus complies with the requirements of the CWUMPO and, on or before the date of its publication, its registration has been authorised by the SFC and a copy of the prospectus has been registered by the Registrar of Companies. Pursuant to section 342C of the CWUMPO, no prospectus offering for subscription or purchase debentures of a company incorporated outside Hong Kong shall be issued, circulated or distributed in Hong Kong unless the prospectus complies with the requirements of the CWUMPO and, on or before the date of its publication, circulation or distribution in Hong Kong, its registration has been authorised by the SFC and a copy of the prospectus has been registered by the Registrar of Companies.
