The Hong Kong Securities and Futures Commission (SFC) has revoked the licence of Nerico Brothers Limited (NBL) and imposed a lifetime industry ban on its director, Jerff Lee Cheuk Fung, after uncovering serious misconduct involving client funds.
Hong Kong Regulator Revokes Nerico Brothers Licence Over Client Asset Misuse
Between June 2020 and January 2021, NBL misused more than US$68m of a client’s funds on six occasions to subscribe to shares in a Cayman fund for its own benefit, without the client’s consent. The firm retained the profits before repaying only the principal by mid-2021.
The SFC also found that NBL knowingly facilitated a scheme led by Neo Ng Yu, which misappropriated around US$154m of the same client’s assets. The funds were purportedly invested in “liquidity provider units” of a sub-fund, but no such units existed. Instead, significant sums were channelled to Ng and his related entities.
Investigators said NBL fabricated documents and provided false information to conceal the misuse of assets, later presenting contradictory explanations regarding the funds’ whereabouts.
The SFC concluded that the misconduct was directly attributable to Lee, who personally gave false statements during the inquiry and maintained close ties with Ng.
In determining the sanctions, the regulator cited the seriousness of the breaches, the loss of client funds, and the damage caused to investor confidence. NBL, which once held licences to trade securities, futures, forex and manage assets, was ordered to be wound up by Hong Kong’s High Court in 2022.
