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Retail trader jailed for securities fraud via illegal short selling

The Eastern Magistrates’ Court today sentenced Ms Christine Yeung Tak Sum, a retail trader, to 18 months of imprisonment following her conviction for securities fraud involving illegal short selling in a prosecution brought by the Securities and Futures Commission (SFC) (Note 1).

This is the first case where an individual was convicted for the offence of employing a fraudulent or deceptive scheme with intent to defraud in transactions involving securities under section 300 of the Securities and Futures Ordinance in the context of illegal short selling.

In sentencing, Magistrate Mr Jeffrey Sze Cho Yiu remarked on the serious nature of the offence, the premeditation in the commission of the offence and a significant amount of illicit profits involved. The Magistrate concluded that taking into account these factors and the importance of upholding Hong Kong’s status as an international financial centre, a strong deterrent message must be sent to the public by imposing an immediate custodial sentence on the wrongdoer.

The SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “We welcome the court’s decision. This case stemmed from a complex ramp-and-dump investigation in which we discovered suspected securities fraud by way of illegal short selling immediately before the collapse of the share price. The outcome of this case sends a clear and strong warning to market participants that the SFC has zero tolerance for market misconduct. We will redouble our efforts to root out market misconduct in order to safeguard market integrity and maintain a level playing field for Hong Kong.”

End

Note:

  1. Please refer to SFC’s press releases dated 7 November 2023 and 27 February 2024 for details.

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