Hong Kong's Securities And Futures Commission Obtains Disqualification Orders Against Former Chairmen And Chief Executive Officer Of First China Financial Network Limited

The Securities and Futures Commission (SFC) has obtained disqualification orders in the Court of First Instance against three former directors of First China Financial Network Holdings Ltd (First China): Mr Wang Wenming, former Chairman, Mr Lee Yiu Sun, former Chief Executive Officer, and Mr Richard Yin Yingneng, Wang’s predecessor (Notes 1, 2 & 3). 

Wang, Lee and Yin have been disqualified from being a director or being involved in the management of any listed or unlisted corporation in Hong Kong, without leave of the Court, for seven, five, and four years respectively (Notes 4 & 5).

The SFC alleged that Wang, Lee and Yin dishonestly breached their duties to First China by either concocting or lending support for the concoction of a non-existent oral agreement called the mutual understanding and agreement (MUA) that purportedly required First China to distribute a dividend of RMB18,692,000 to Fame Treasure Ltd, the seller of a company acquired by First China in 2007, which Wang was a majority shareholder. 

The Court made the disqualification orders after finding that the MUA was a concoction and that the clarification announcement issued by First China on 16 December 2008 which stated that the MUA requiring the distribution was false or misleading in a material particular.

Earlier this year the Court ordered that Wang, Lee and Yin to repay First China a total sum of RMB18,692,000, being the amount they caused First China to distribute to Fame Treasure Limited on the basis that the MUA existed. First China has received this money from Wang.

Notes:

1. Wang was appointed as the Chairman of First China on 12 June 2008 and Lee was appointed as Chief Executive Officer on 28 September 2006.  Both of them resigned with effect from 22 September 2015. Yin was appointed as Chairman of First China on 1 June 2005, re-designated to Non-Executive Director on 12 June 2008 and resigned with effect from 9 December 2008. 
2. First China was listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited on 11 January 2002 (stock code 8123). The group provides financial services, such as stock brokerage, information and research, securities and futures trading, corporate finance and wealth management.
3. The SFC commenced proceedings under section 214 of the Securities Future Ordinance (SFO) in November 2012. See SFC’s press releases dated 12 November 2012 and 19 January 2015. 
4. The disqualification order made against Wang and Lee will take effect from 21 October 2015. The disqualification order made against Yin took effect on 30 September 2015. 
5. Under section 214 of the SFO, the court may make orders disqualifying a person from being a company director or being involved, directly or indirectly, in the management of any corporation for up to 15 years, if the person is found to be wholly or partly responsible for the company’s affairs having being conducted in a manner involving defalcation, fraud or other misconduct.