On December 23, 2024, the Securities and Futures Commission ("SFC") has banned Mr Ng Ka Shun, responsible officer ("RO") of Agg. Asset Management Limited (Agg), for life and fined him $1.7 million for window-dressing Agg’s financial resources and mismanaging two funds.
Ng began window-dressing Agg’s financial resources when the firm submitted its licence application. He misled the SFC into believing that Agg had satisfied the financial requirements for a licence by window-dressing the firm’s liquid capital as of 31 March 2017. After obtaining a licence for Agg, Ng continued to perpetuate the facade that Agg had sufficient liquid capital from May 2017 to February 2020 by providing false or misleading information in the financial returns submitted to the SFC to mask its inability to maintain the required liquid capital of $3 million for 34 months.
The SFC also found that Agg mismanaged two funds in its capacity as investment manager which seriously jeopardised the interests of the funds’ investors, with Ng responsible for making investment decisions for both funds during the material time.
In one of the two funds, Agg invested substantially all of its assets in debentures issued by companies controlled by Ng. By doing so, Agg failed to avoid conflicts of interest and properly manage the risks of the fund, resulting in Ng granting loans to himself with the investors’ subscriptions. Agg also caused the fund to invest in two debentures which appeared to have been constructed for the purpose of inflating the fund’s net asset value.
In another fund, Agg failed to properly safeguard the fund’s assets by allowing Ng to withdraw part of the investors’ subscriptions from the fund ultimately for his own benefit. Agg further failed to ensure that the fund’s investments were in line with its stated investment objective and its assets were valued and properly accounted for.
The SFC is of the view that Agg’s window-dressing activities breached the SFO, the Securities and Futures (Financial Resources) Rules ("FRR") and the Code of Conduct, thereby jeopardising the integrity of the market. The mismanagement of funds by Agg breached the Fund Manager Code of Conduct, resulting in substantial loss to investors.
The SFC considers that Agg’s regulatory breaches were attributable to the failure of Ng in discharging his duty as the firm’s senior management and RO, including his failure to ensure the maintenance of appropriate standards of conduct and adherence to proper procedures by Agg.
This article was generated using SAMS, a proprietary artificial intelligence technology under development by Timothy Loh LLP and its affiliates. This article does not constitute legal advice and should not be relied upon by any person. Only the original text, which is hyperlinked to this article, should be regarded as definitive.
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