Securities Litigation: Success At The Court Of Final Appeal
For immediate Release. March 23, 2015.
March 23, 2015. HONG KONG -- TIMOTHY LOH SOLICITORS successfully represented Pacific Sun Advisors Ltd. ("Pacific Sun"), an investment manager, and Andy Mantel, its director, before the Court of Final Appeal ("CFA") in overturning their convictions for breaches of the Securities and Futures Ordinance ("SFO") as a result of failing to obtain SFC authorization to issue advertisements in respect of a collective investment scheme. In a unanimous ruling delivered on March 20, 2015, the CFA restored the acquittals reached at the original magistracy trial, determining that the professional investors exemption under the SFO, s. 103(3)(k) exempts the issuance of advertisements in respect of securities as long as the securities are sold or intended to be sold only to professional investors.
The CFA's decision represented the final result in a series of proceedings that began with the acquittal of Pacific Sun and Mr. Mantel at the Magistrates Court. The Securities and Futures Commission ("SFC") appealed the acquittals to the High Court. In that appeal, in which this firm did not act, the SFC argued that the professional investors exemption was available only if the advertisement itself stated that the securities were to be sold or were intended to be sold only to professional investors and that a process to screen investors to assess if they were professional investors was irrelevant. The High Court agreed with the SFC and the charges were remitted to the Magistrates Court. In light of the High Court's determination, on the re-hearing, Pacific Sun and Mr. Mantel were convicted even though the magistrate had found that Pacific Sun had only been selling the collective investment scheme to professional investors. On behalf of Pacific Sun and Mr. Mantel, this firm appealed the High Court's decision to the CFA and the CFA ultimately set aside the determination of the High Court, rejecting the SFC's arguments.
Commenting on the decision, Mr. Timothy Loh, Founder and Managing Principal stated: "The decision serves as a reminder that despite the enormous resources which regulatory bodies can bring to their enforcement matters, their interpretation of the law may sometimes be wrong and accordingly, there is a real possibility of prevailing in the end. The decision also highlights the complexity of financial market laws not only in terms of the proliferating number of these laws but also the difficulties in applying these laws and shows that even innocent differences in the understanding of these laws can result in regulatory investigations and white collar criminal prosecutions."