Hong Kong SFC fines Ardon Maroon Fund Management $800,000

SFC fines

The Hong Kong Securities and Futures Commission (SFC) has informed the public that it has fined Ardon Maroon Fund Management (Hong Kong) Limited (Ardon Maroon) (now known as China Silver Asset Management (Hong Kong) Limited) $800,000 for cross-trade related failures in managing the Ardon Maroon Asia Master Fund (AM Fund).

The complete announcement can be seen below:

The SFC found that Ardon Maroon gave instructions to a brokerage to execute a cross trade for 15 million shares of a listed company on the Stock Exchange of Hong Kong on 8 August 2014, which resulted in the AM Fund conducting a wash trade. Ardon Maroon then instructed another brokerage to deliver the relevant shares to settle the wash trade.

A cross trade that does not involve any change of beneficial ownership is a wash trade which is presumed to be manipulative under the Securities and Futures Ordinance (SFO) and is not in the best interests of market integrity. The wash trade conducted by the AM Fund was also not in the best interests of the holders of the fund because by doing so, the fund incurred undue transaction costs of over $133,000.

By instructing the cross trade, Ardon Maroon failed to exercise due skill, care and diligence in managing the AM Fund.

In deciding the disciplinary sanction, the SFC took into account:

  • the Disciplinary Fining Guidelines;
  • the cross trade was an isolated incident;
  • Ardon Maroon has an otherwise clean disciplinary record with the SFC;
  • Ardon Maroon did not benefit from the cross trade;
  • a clear message needs to be sent to fund managers that the SFC would not tolerate conduct that is not in the best interests of the clients and market integrity;
  • and Ardon Maroon’s financial situation.

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