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Screenshot of a breaking news alert e-mail from Q2 2017
The Securities and Futures Commission (SFC) has reprimanded Value Partners Limited (VPL) and Value Partners Hong Kong Limited (VPHKL) (collectively, Value Partners), and fined them $2 million respectively for failures to comply with the regulatory requirements in managing two SFC-authorized funds.
The SFC found that the two funds, namely, Value Partners China Greenchip Fund Limited and Value Partners Greater China High Yield Income Fund, had issued shares in excess of their authorized share capital as provided in their Memorandum and Articles of Association.
In doing so, VPL and VPHKL have failed to manage the funds in accordance with their constitutive documents as required by the Code on Unit Trusts and Mutual Funds.
The SFC also found that Value Partners did not report the incidents to the SFC until six months after they were uncovered.
The SFC considers the incidents serious as they called into question the validity of the shares issued to investors of the funds. In deciding the penalty, the SFC took into account that Value Partners:
- co-operated with the SFC in resolving the SFC’s concerns;
- took actions to rectify the failures and there were no apparent investor losses; and
- engaged an independent reviewer to conduct a review of Value Partners’ internal control systems with respect to all SFC-authorized funds managed by Value Partners.