Court Finds ex-HKMEx Head Guilty of Conspiracy to Defraud SFC

Source: Regulation Asia Editors, Regulation Asia 2020-07-20

The former head and CFO of now-defunct Hong Kong Mercantile Exchange conspired to hide the exchange’s true financial position and mislead the SFC into allowing it to retain its licence.

Hong Kong’s District Court has found the ex-head of the now-defunct HKMEx (Hong Kong Mercantile Exchange) guilty of conspiracy to defraud and fraud charges, reports RTHK.

Barry Cheung Chun-yuen, 62, who headed the commodities trading platform between Mar 2012 and its collapse in May 2013, was found to have conspired with the HKMEx chief financial officer Jacky Choi Tat-ying to hide the exchange’s true financial position and mislead the SFC (Securities and Futures Commission) into allowing it to retain its ATS (automated trading services) licence.

Cheung had pleaded not guilty. His co-conspirator, Choi, however had pleaded guilty and became a prosecution witness against Cheung.

The ATS licence was granted to HKMEx in September 2011, on the condition that it would have sufficient resources and provide regular reports on its financial situation to the SFC.

According to the SCMP, Choi testified that Cheung had given instructions to keep the SFC in the dark to buy time to find more capital to keep HKMEx afloat, using methods such as bad cheques and false, misleading or favourable snapshots of the exchange’s financial position.

Both Cheung and Choi were found guilty of conspiracy to defraud, which carries a maximum sentence of 14 years’ imprisonment in Hong Kong, though capped at seven years in District Court.

Cheung was also found guilty of fraud for cheating a company called Sinomax Finance out of HKD 30 million. The funds were transferred into New Effort Holdings, a business Cheung owned and which was the majority shareholder of HKMEx, to try to keep the commodities market afloat.

Both defendants were remanded into custody without bail, and will await sentencing on 23 June.

Choi is said to be seeking a suspended sentence to account for his cooperation with the prosecution.

Cheung was formerly an adviser to ex-chief executive Leung Chun-ying, having served as campaign chairman in the 2012 election, and a non-official member of the Executive Council after the election.

香港证监会

Hong Kong Mercantile Exchange

Cheung Chun-yuen

Court Finds ex-HKMEx Head Guilty of Conspiracy to Defraud SFC

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