Hong Kong’s Securities And Futures Commission: Former Director Of DBA Telecommunication (Asia) Holdings Limited Convicted Of Issuing False Or Misleading Announcement

The Eastern Magistrates’ Court today convicted Mr Chan Wai Chuen, former chief financial officer, company secretary and an executive director of DBA Telecommunication (Asia) Holdings Limited (DBA) for his role in a false or misleading statement in DBA’s announcement in a prosecution brought by the Securities and Futures Commission (SFC) (Notes 1 & 2).

On 28 March 2013, DBA published its results announcement for the year ended 31 December 2012 on the Stock Exchange of Hong Kong Limited’s (SEHK) website.  The SFC’s investigation revealed that DBA’s financial statements, which Chan was allegedly involved in its preparation and publication at the time, had not been agreed by the auditors, as required under the Rules Governing the Listing of Securities on the SEHK (Listing Rules). 

As a result, DBA’s statement that the results announcement complied with the applicable disclosure provisions of the Listing Rules was false or misleading in a material particular, in breach of section 384 of the Securities and Futures Ordinance (SFO) (Notes 3 & 4).

In convicting Chan, the Magistrate found that when DBA’s results announcement was published, Chan knew that there were outstanding audit works and that the financial statements had not been agreed by the auditors but in any event, proceeded with its publication.  As an officer of DBA, Chan was liable for DBA’s breach under section 390 of the SFO.  

Chan was fined $60,000 and ordered to pay the SFC’s investigation costs.

Notes:

1. DBA is listed on the Main Board of the SEHK.  Trading of DBA shares has been suspended since 6 June 2013.
2. Chan resigned from all his positions in DBA with effect from 27 September 2013. 
3. Under section 384 of the SFO, it is a criminal offence to provide false or misleading information in a material particular to the SFC via the SEHK.  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.
4. On 28 June 2018, DBA pleaded guilty to one count of offence under section 384 of the SFO.  Please see the SFC’s press release dated 28 June 2018.