HONG KONG: Broker convicted of illegal Hong Kong short selling

Friday October 26 2012

The Eastern Magistrates Court has convicted a broker after he pleaded guilty to four counts of illegal Hong Kong short selling in the shares of Pacific Plywood Holdings Limited.

Mr Ng Kwok Wing, a licensed representative of Phillip Securities (Hong Kong) Limited and Phillip Commodities (HK) Limited, was fined a total of $14,000 and ordered to pay the Securities and Futures Commission’s investigation costs of $17,803.

The court heard that, on 20 May 2011, Ng sold two million shares of Pacific Plywood through his personal account without taking reasonable steps to ascertain that he had sufficient holding before selling the shares. As a result, a buy-in trade was executed by the Stock Exchange of Hong Kong Limited to cover the shortfall.

On 25 May 2011, Ng further sold 7,836 shares of Pacific Plywood before confirming the quantity of the buy-in trade. Ng’s act contravened section 170(1) of the SFO which prohibits the sale of securities when the person does not have a presently exercisable and unconditional right to sell them.

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