The Market Misconduct Tribunal (MMT) has ordered Mr Li Han Chun, the former chief executive officer (CEO) of China Forestry Holdings Company Limited (China Forestry), and his investment vehicle, Top Wisdom Overseas Holdings Limited (Top Wisdom), to disgorge $353,430,000 which represents the loss they avoided by insider dealing of China Forestry’s shares (Notes 1 to 5).
The MMT also imposed the following orders against Li Han Chun and Mr Li Kwok Cheong, the former chairman of China Forestry, as a result of the MMT’s finding that they disclosed false or misleading information in China Forestry’s IPO prospectus, annual results announcement, and annual report for the year ended 31 December 2009, inducing transactions in the company’s shares:
Disqualification orders for five years, which prohibit them from being a director, liquidator, or receiver or manager of the property or business of, or being concerned or taking part in the management of, any listed or unlisted corporation in Hong Kong, without leave of the court (Note 6);
Cold shoulder orders for five years, which ban them from dealing in any securities, futures contract, leveraged foreign exchange contract or collective investment scheme in Hong Kong (Note 7); and
Cease and desist orders, which prohibit them from engaging in any conduct which constitutes market misconduct (Note 8).
The MMT further ordered Li Han Chun, Li Kwok Cheong and Top Wisdom to pay the costs and expenses incurred by the Government and the SFC (Note 9).
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Notes:
The proceedings were heard before the MMT Chairman, Mr Michael Lunn, GBS and two members.
Please see the SFC’s press releases dated 7 August 2024 and 28 June 2018.
The MMT report setting out the reasons of making the relevant orders is available on its website (www.mmt.gov.hk).
China Forestry was listed on the Main Board of The Stock Exchange of Hong Kong Limited on 3 December 2009. On 26 January 2011, trading in the shares of China Forestry was suspended after discovery of serious irregularities by its then auditors KPMG. Pursuant to an Order of the Grand Court of the Cayman Islands dated 18 June 2015, China Forestry was wound-up in accordance with the law of the Cayman Islands. On 24 February 2017, the listing of China Forestry’s shares was cancelled.
The disgorgement order was made under section 257(1)(d) of the Securities and Futures Ordinance (SFO) for any profit gained or loss avoided by the person to be paid to the Government. The MMT has further ordered that, pursuant to section 259 of the SFO, Li Han Chun and Top Wisdom shall pay compound interest on the disgorged sum of $353,430,000, calculated from 12 January 2011 with yearly rests.
The disqualification orders were made under section 257(1)(a) of the SFO where the maximum period of the disqualification is five years.
The cold shoulder orders were made under section 257(1)(b) of SFO where the maximum period of the order is five years.
The cease and desist orders were made under section 257(1)(c) of the SFO.
The costs orders were made under sections 257(1)(e) and (f) of the SFO.
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