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Hong Kong – Recent Enforcement Actions And Penalties Involving HKEx-Listed Companies.

22 September, 2014

 


  • The SFC commenced proceedings in the Hong Kong Court of First Instance and the Market Misconduct Tribunal (MMT) against HKEx-listed CITIC Limited (CITIC) and five of its former executive directors in relation to alleged disclosure of false and misleading information. On 12 September 2008 CITIC issued a circular stating that there had been no material adverse change in its financial situation since the end of 2007, but shortly thereafter CITIC disclosed a massive unrealized mark to market loss from leveraged foreign exchange contracts, which led to a 55% fall in its share price. The SFC alleges that CITIC and the directors were aware of this unrealized loss prior to 12 September 2008 and is seeking orders that CITIC and the directors compensate investors for their losses.
  • The SFC commenced proceedings in the MMT against Ms. Salina Yu Lai Si (Ms. Yu), the former CEO of HKEx-listed Water Oasis Group Limited (Water Oasis) for alleged insider dealing in Water Oasis shares. Ms. Yu had sold shares in Water Oasis on 20 January 2012, shortly after finding out about the termination of an important distributorship contract. Water Oasis did not announce the termination of the contract until after market close on the same day.
  • The Hong Kong Court of First Instance granted a freezing order over 107,290,000 shares in HKEx-listed Hisense Kelon Electrical Holdings Limited which it alleges are held for the 
  • benefit of Mr. Gu Chujun (Mr. Gu), the former chairman and CEO of HKEx-listed Greencool Technology Holdings Limited (Greencool). Mr. Gu and other members of Greencool senior management are the subject of ongoing proceedings under Section 213 of the Securities and Futures Ordinance in relation to alleged gross overstatements of the financial position of Greencool.
  • Long Success International (Holdings Limited) and certain of its directors were publicly censured by the GEM Listing Committee of the HKEx for failing to obtain shareholders’ approval for material changes to transactions that had been previously approved by shareholders.
  • OTO Holdings Limited (OTO) and certain of its directors were publicly censured by the Listing Committee of the HKEx for failing to disclose a significant deterioration in the financial performance of OTO as soon as reasonably practicable. OTO had issued a profit warning announcement on 16 March 2012, but the Listing Committee found that the board of OTO had been in possession of information for a period of at least nine days prior to issuing the profit warning, and should have acted sooner.
  • Changfeng Axle (China) Company Limited and its executive and non-executive directors were publicly criticized by the Listing Committee for failing to publish an announcement disclosing the significant deterioration in its financial performance as soon as reasonably practicable.

Skadden

 

For further information, please contact:

 

Christopher Betts, Partner, Skadden
christopher.betts@skadden.com


Edward Lam, Partner, Skadden
edward.lam@skadden.com


Alec Tracy, Partner, Skadden
alec.tracy@skadden.com


Will Cai, Partner, Skadden
will.cai@skadden.com

 

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