Hong Kong Securities and Futures Commission case results in District Court jail terms up to 24 months for social media stock tip ramp-and-dump securities fraud

The Hong Kong Securities and Futures Commission reported that the District Court has sentenced two masterminds to imprisonment and ordered their wives to perform community service following convictions for securities fraud involving social media “stock tips” and alleged ramp-and-dump schemes in four Hong Kong-listed shares. The Department of Justice prosecuted two married couples after an SFC investigation uncovered their involvement in schemes promoted on social media, where the defendants acted on information from “WeChat teachers” and engaged in naked short selling for profit. Li King Hong received a 24-month prison sentence and Lam Hin Fai received 22 months, while Chan Ngai See and Betty Hui Pui Yan were ordered to complete 180 hours and 120 hours of community service respectively. Between June and September 2020, the court heard that Li and Lam directed their wives to deceive an account executive at CVP Securities Limited on nine occasions by falsely representing ownership of shares, inducing CVP to place sell orders; shares were sold at inflated prices despite not being owned, then repurchased after the price fell to close the short positions, generating $3.3 million in profits. The shares involved were NOIZ Group Limited (08163), National Investment Fund Limited (01227), Contel Technology Company Limited (01912) and Sino Prosper (Group) Holdings Limited (00766).