Hong Kong's Securities and Futures Commission: C.L. Management Services Limited And Its Director Fined $1.5 Million For Unlicensed Activities

The Eastern Magistrates’ Court today fined C.L. Management Services Limited (C.L. Management) and its sole owner and director Ms Clarea Au Suet Ming a total of $1.5 million for unlicensed activities. Au was also sentenced to a total of six months’ imprisonment suspended for 18 months and ordered to pay the Securities and Future Commission’s (SFC) investigation costs (Notes 1 & 2).

On 29 April 2014, the Eastern Magistrates’ Court convicted C. L. Management and Au on three counts of holding out as providing advisory services on corporate finance without a licence from the SFC after they pleaded not guilty.

An SFC investigation revealed that between October 2010 and January 2012, C.L. Management had entered into service agreements with three companies for advising on their listing applications. The court accepted that the scope of services under these service agreements constituted advising on corporate finance and by entering into these service agreements, C.L. Management represented itself as being prepared to advise these three companies on their listing applications. The court also found Au guilty for giving consent to or conniving at the offences committed by C.L. Management (Note 3).

C.L. Management and Au were also charged with providing advisory services on corporate finance to one of the three companies around the period from July 2011 to January 2012 without a licence. However, the magistrate had reservation in concluding that a one-off transaction amounted to carrying on a business and acquitted C.L. Management and Au of the charge (Note 4).

The SFC reminds investors to check the SFC’s Public Register of Licensed Persons and Registered Institutions on the SFC website (www.sfc.hk) to ensure that people who provide advice on regulated activities are properly licensed.

Notes:

1. C. L. Management and Au were each convicted of three counts of holding out as carrying on a business of advising on corporate finance without a licence, respectively contrary to section 114(1)(b) of the Securities and Futures Ordinance (SFO).
2. Under the SFO, advising on corporate finance is a regulated activity which requires a Type 6 (advising on corporate finance) licence from the SFC.
3. 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.
4. Under section 114(1)(a) and 114(8) of the SFO, a person commits an offence when the person, without reasonable excuse, carries / carried on a business in a regulated activity without a licence.