HK regulator bans former Convoy Asset Management rep for 10 years

The Securities and Futures Commission (SFC) of Hong Kong has imposed a 10-year ban on Mr. Peter Law Chi Kin, a former licensed representative of Convoy Asset Management Limited (CAML), from re-entering the industry due to his involvement in a stock manipulation scheme. The ban, effective from 26 April 2023 to 25 April 2033, comes as Law solicited and arranged for 10 of his clients and friends to buy shares in a company listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (Company A) from manipulators involved in the scheme. Law's clients agreed to hold the shares for one to three months, while the manipulators purportedly pushed up the share price. The clients also agreed to sell them only with the Law's permission in return for cash rebates of 12% to 15% of the transaction value. However, Law's clients ended up suffering substantial losses as they were not allowed to offload their shares before the share price of Company A collapsed.

Law received $535,500 from the manipulators for his involvement in the scheme, but he did not disclose to his clients that he would receive a commission for soliciting them to buy the shares of Company A. Furthermore, Law gave his clients reckless advice, including dissuading them from offloading their shares when the share price of Company A began to fall and reassuring them that they would recoup their losses or even make a profit by holding onto the shares. As a result, his clients missed opportunities to mitigate their losses.

On Law's recommendation, two clients tapped into the overdraft facilities offered by a brokerage firm to fund their purchase of the shares of Company A. However, Law did not explain to them the risks that they might be required to deposit extra cash into their accounts should the market value of their shares fall. The shares of the two clients were force sold by the brokerage firm when the share price of Company A plummeted.

The SFC found that Law coordinated with a colleague, Mr Wong Kwun Shing, to arrange the transactions through which his clients bought the shares from the manipulators. Law gave detailed instructions to his clients to ensure that their bid orders would match the manipulators' ask orders. After the transaction was completed, Wong collected the cash rebates from the manipulators and paid Law for onward distribution to his clients.

In determining the sanction against Law, the SFC took into account a variety of factors, including that Law's misconduct was deliberate, serious, and blatantly dishonest and led to significant losses for his clients. The regulator also considered the need to send a strong deterrent message to the industry that such misconduct will not be tolerated. The SFC fined Law $535,500, equivalent to the profit he gained from participating in the scheme. The SFC considers that Law is not fit and proper to be a licensed person.