Hong Kong's Securities And Futures Commission : Broker Acquitted Of Illegal Short Selling

The Eastern Magistrates’ Court, on 30 May 2014, found Mr Wong Hung not guilty of illegal short selling five stocks in January 2012 (Note 1).

The Securities and Futures Commission (SFC) alleged that 20 times between 6 and 20 January 2012, Wong sold shares of five listed companies through his securities account when the total of all the shares he sold was more than the shares he held, contrary to section 170 of the Securities and Futures Ordinance (Note 2).

In deciding to acquit Wong, Magistrate Mr David Chum Yau-fong found that because Wong placed a lot of orders each day, he could not exclude the possibility that Wong was careless when placing the sell orders about whether he was selling more shares than he held.

Accordingly, the Magistrate found that the prosecution had not proved the case beyond reasonable doubt.

The SFC is considering the Magistrate’s decision.

Notes:

1. Wong is licensed as a representative under the Securities and Futures Ordinance (SFO) to carry on Type 1 (dealing in securities) regulated activity. He was accredited to Hung Sing Securities Limited at the material time and is currently accredited to KGI Asia Limited.
2. Section 170 of the SFO prohibits the sale of securities when the person does not have a presently exercisable and unconditional right to sell them.