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The Securities and Futures Commission (SFC) has revoked the licence of Ms Zeng Huiyu and prohibited her from re-entering the industry for five years from 8 May 2013 to 7 May 2018 (Note 1).
The SFC’s action follows an investigation into trading by Zeng in the shares of Nexen Inc. (Nexen) on the New York Stock Exchange (NYSE) days before the public announcement by CNOOC Limited (CNOOC) on 23 July 2012 that CNOOC had entered into an agreement to acquire Nexen for approximately US$15.1 billion (Announcement). Zeng’s purchases were conducted for a personal account she held with GF Securities (Hong Kong) Brokerage Ltd where she was employed and for three clients accounts for which she had a discretionary authority (Notes 2 and 3).
On the day of the Announcement, the shares of Nexen on the NYSE closed at US$25.90 compared to the previous day’s closing price of US$17.06, an increase of about 52 percent. Zeng immediately sold almost all the Nexen shares she had bought resulting in profits of around US$202,000 (equivalent to around HK$1,575,000) for her own account and around US$1,244,000 (equivalent to around HK$9,707,000) for her three client accounts.
Zeng’s conduct resulted in insider dealing allegations against her in proceedings commenced by the US Securities and Exchange Commission (SEC) (Note 4).
These matters call into question Zeng’s fitness and properness to be licensed by the SFC to carry on regulated activities in Hong Kong. Zeng has agreed to accept the SFC’s disciplinary action in relation to these matters.
In deciding the penalty, the SFC has taken into account Zeng’s clean disciplinary record and co-operation with the SFC.
The SFC wishes to acknowledge the assistance of the SEC.
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Notes:
- Zeng is a licensed representative under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) regulated activity and accredited to GF Securities (Hong Kong) Brokerage Ltd.
- Nexen is a global energy company incorporated and domiciled in Canada and headquartered in Calgary, Canada. It is listed on the Toronto Stock Exchange and the NYSE under the symbol “NYX”.
- CNOOC is an energy company incorporated and headquartered in Hong Kong. It is listed on the Hong Kong Stock Exchange under the code “883” and on the NYSE under the symbol “CEO”.
- On 27 July 2012 and amended on 3 August 2012, the SEC filed a complaint against a number of defendants including "Certain Unknown Traders in the Securities of Nexen Inc. in an Account of Phillip Securities PTE Ltd" for illegal insider trading in Nexen shares prior to the Announcement. Zeng was later identified as one of these unknown traders. Zeng subsequently agreed to the SEC entering final judgment against her in which she agreed, without admission or denial of liability, to among other things, pay the SEC around US$404,000 representing disgorgement of her trading profits in the Nexen shares and a penalty. Please see SEC press release dated 29 March 2013 on the SEC website.
- A copy of the Statement of Disciplinary Action in relation to the matter is available on the SFC website.
