The Market Misconduct Tribunal (MMT) has ordered Mr. Yao Weicheng, former responsible person of Chong Fu Hang Asset Management (Hong Kong) Co., Ltd. (Chong Fu Hang), to surrender over HKD 5.6 million obtained from fraudulent transactions and disqualify him for a period of four years following legal proceedings instituted by the Securities and Futures Commission (SFC).

The SFC claimed that during 22 trading days from August to September 2014, Yao instructed buy and sell orders for the shares of China Medical Technology (08156.HK) and Quantum Thinking (08050.HK) through Chong Fu Hang's managed hedge fund brokerage account and his mother's brokerage account, causing the opposite orders to be matched and executed. These matching transactions had the effect of creating false or misleading appearance with respect to the trading activity or price of the relevant listed securities, and enabled his mother's brokerage account to profit HKD 5.6 million, causing losses to the hedge fund.

The SFC also claimed that Yao was responsible for managing the hedge fund at the critical time and making investment decisions for it. At the same time, he was also a director, investment director and major shareholder of Chong Fu Hang.

The MMT issued a disqualification order, prohibiting Yao from acting as a director in Hong Kong or participating in the management of any listed or unlisted corporation in Hong Kong for a period of four years; prohibiting Yao from trading in securities, futures contracts, leveraged foreign exchange contracts or collective investment schemes in Hong Kong for a period of four years, effective from last Friday (June 28); Yao is also forbidden from engaging in any conduct constituting market misconduct; he must pay the government over HKD 5.6 million in profits obtained from market misconduct; and he must bear the SFC’s investigation and legal expenses, as well as part of the costs involved in the MMT hearing procedure.