SFC revokes the licence of Nerico Brothers Limited and bans its senior management for life

The Securities and Futures Commission (SFC) has revoked the licence of Nerico Brothers Limited (NBL) for facilitating misappropriation of client assets and other misconduct (Note 1).

The SFC has also banned NBL’s director, Jerff Lee Cheuk Fung, from engaging in all regulated activities for life (Note 2).

Misuse of client assets

The SFC found that, between June 2020 and January 2021, NBL misused a client’s funds totalling over US$68 million on six occasions to subscribe for shares in two segregated portfolios of a Cayman-incorporated fund (Fund) for the firm’s own account.  NBL retained the profits arising from the subscriptions for itself and only returned the subscription principals to the client’s account at NBL by June 2021.

Notably, NBL’s acts were done without the client’s knowledge, instruction, authorization or consent, and in breach of the express terms of the client agreement.

Facilitation of the misappropriation of client assets

The SFC also found that NBL knowingly facilitated a scheme orchestrated by Neo Ng Yu and his connected persons and entities, resulting in the misappropriation of approximately US$154 million of the same client’s funds since January 2021 (Notes 3 and 4).

Specifically, between January and August 2021, NBL transferred nearly all the client’s funds to one of the segregated portfolios of the Fund (Sub-fund) for the purported acquisition of “liquidity provider units” from the Sub-fund for the client (Note 5).  However, the Sub-fund neither issued nor held any “liquidity provider units”, contrary to NBL’s claim.  As a matter of fact, a significant portion of the client’s funds were subsequently used by or dissipated to Neo Ng and his corporate vehicles.  To disguise and conceal the misappropriation, NBL either fabricated or employed fabricated transaction documents and account statements as part of the scheme.

Provision of false or misleading information to the SFC

During the SFC’s inquiry and investigation, NBL presented two contradictory narratives and relied on two sets of conflicting documents to explain the usage and whereabouts of the misappropriated client funds.  While NBL initially claimed that the client’s funds were transferred to the Sub-fund to acquire “liquidity provider units” issued by the Sub-fund, it later changed its explanation and asserted that the funds were used to acquire from the Sub-fund “liquidity provider units” issued by a different Cayman-incorporated fund.

The SFC’s investigation further revealed that both narratives were false.  The client’s funds were not used to acquire any “liquidity provider units” and they were in fact misappropriated.  In addition, both sets of documents relied on by NBL to support these false narratives and conceal the misappropriation were fabricated.

Senior management responsibility

The SFC considers that the misconduct of NBL was directly attributable to the actions of Lee, who was the directing mind behind NBL’s misuse of the client’s funds and facilitation of their misappropriation by Neo Ng, with whom he had close ties.

Lee also personally breached the SFO by knowingly giving false or misleading answers and explanations in his interviews with the SFC.

In deciding the disciplinary sanctions against NBL and Lee, the SFC has taken into account that:

• their conduct was egregious and serious, undermining the confidence of investors and the public in market integrity;

• their honesty and integrity were compromised;

• their conduct caused significant losses to the client; and

• they each had an otherwise clean disciplinary record.

End

Notes:

1. NBL is licensed under the Securities and Futures Ordinance (SFO) to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 3 (leveraged foreign exchange trading), and Type 9 (asset management) regulated activities.  NBL was ordered to be wound up by the High Court of Hong Kong on 3 May 2022.

2. Lee is a director of NBL.  While Lee was not a licensed person under the SFO during the relevant period, he falls within the definition of a “regulated person” under section 194(7) of the SFO, which includes a person who is, or at the relevant time was, involved in the management of the business of a licensed corporation.

3. Please refer to the SFC’s press release dated 28 August 2025 for the SFC’s related disciplinary actions against Amber Hill Capital Limited (the manager of the Sub-fund during the relevant period) and its former senior management, Neo Ng and Simon Ng She Chun.

4. Neo Ng has been a substantial shareholder of the holding company of NBL’s client since 23 December 2020.  Neo Ng also served as a director of the client from 15 July 2021 to 20 January 2022.

5. According to NBL, its clients were required to purchase “liquidity provider units” issued by a fund in order to trade currency with the issuing fund.