The Hong Kong Securities and Futures Commission (SFC) has revoked the licence of Nerico Brothers Limited (NBL) and banned its director, Jerff Lee Cheuk Fung, from engaging in all regulated activities for life after finding the firm misused client funds, facilitated a larger misappropriation scheme, and provided false or misleading information during the regulator’s investigation. Between June 2020 and January 2021, NBL used a client’s funds totalling over USD 68 million on six occasions to subscribe for shares in two segregated portfolios of a Cayman-incorporated fund for the firm’s own account, retained the profits, and returned only the subscription principals to the client’s account at NBL by June 2021, without the client’s knowledge or consent and in breach of the client agreement. From January 2021, NBL also knowingly facilitated a scheme orchestrated by Neo Ng Yu and connected persons and entities that led to the misappropriation of approximately USD 154 million of the same client’s funds, including transfers to a segregated portfolio of the fund for the purported acquisition of “liquidity provider units” that neither existed nor were held by the sub-fund, with a significant portion of the funds subsequently used by or dissipated to Neo Ng and his corporate vehicles. To conceal the scheme, NBL fabricated or used fabricated transaction documents and account statements, and later advanced contradictory narratives to the SFC that its investigation found to be false; the SFC attributed NBL’s misconduct directly to Lee as the “directing mind” and found he knowingly gave false or misleading answers in interviews. NBL was licensed to carry on Type 1, Type 2, Type 3 and Type 9 regulated activities and was ordered to be wound up by the High Court of Hong Kong on 3 May 2022. The SFC also pointed to a separate press release on related disciplinary action against Amber Hill Capital Limited and its former senior management.

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