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Retail investors convicted of illegal short selling and fined $16,000


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UK FCA fines Henderson Investment Funds Limited £1,867,900

The Eastern Magistrates’ Court today convicted Mr Cheng Chi Fei and Mr Wong Kin after they pleaded guilty to illegal short selling in the shares of China Agri-Products Exchange Limited (China Agri-Products).

The Court fined Cheng and Wong a total of $16,000. They were ordered to pay the Hong Kong Securities and Futures Commission’s investigation costs.

In March 2014, Cheng and Wong applied for rights shares of China Agri-Products. On 21 March 2014, before the rights issue became unconditional and the result of the allotment of rights shares was announced, Cheng illegally sold 2,967,999 China Agri-Products rights shares, whilst Wong sold 5,494,984 of the same through his friend’s account illegally in the capacity of an authorized person.

By short-selling the above rights shares, Cheng and Wong contravened section 170 of the Securities and Futures Ordinance (SFO). Section 170 (1) of the SFO prohibits the sale of securities when a person does not have a presently exercisable and unconditional right to sell them.

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Retail investors convicted of illegal short selling and fined $16,000

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