HONG KONG: Retail investor convicted of illegal Hong Kong short selling

Thursday July 25 2013

Today a retail investor has been convicted by the Eastern Magistrates’ Court of illegal Hong Kong short selling in the shares of China Properties Investments Holdings Limited.

On 3 May 2011, Mr Law Kwong Shing sold 199,940,000 excess rights shares to be issued by China Properties after he had applied for them. The sale occurred before he received the shares and confirmation as to the quantity of or allocation of excess rights shares, as well as before any public announcement by China Properties on the allocation result of the excess rights shares application. The court found that this constituted illegal Hong Kong short selling contrary to section 170 of the Securities and Futures Ordinance because at the time of the sale, the investor did not have reasonable grounds to believe that he had a presently exercisable and unconditional right to sell the shares.

The investor pleaded guilty and was fined $3,000 and ordered to pay the Securities and Futures Commission’s (SFC) investigation costs.

Please click on the above link for the SFC press release.