SFC issues restriction notice to a broker to freeze client accounts related to a corporate officer’s suspected breach of duties

27 Sep 2019



The Securities and Futures Commission (SFC) has issued a restriction notice to KGI Asia Limited (KGI), prohibiting the broker from dealing with or processing certain assets held in several client accounts which are beneficially owned by an individual who is suspected of breaching his duties towards a listed corporation (Notes 1 & 2).

The SFC is not investigating KGI, which has cooperated with the SFC’s investigation.  The restriction notice does not affect KGI’s operations or its other clients.  

The restriction notice prohibits KGI, without the SFC’s prior written consent, from disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with certain assets in those accounts in any way.  KGI is also required to notify the SFC if it receives any of these instructions.

The SFC will soon commence civil proceedings under section 214 of the Securities and Futures Ordinance (SFO) in the Court of First Instance against the listed corporation’s management team which includes the individual who holds those accounts.  The SFC will also seek court orders against that individual to pay compensation to the listed corporation concerned.  

In such circumstances, the SFC considers that the issue of the restriction notice, which preserves the assets in those accounts, is desirable in the interest of the investing public and in the public interest. 

End

Notes:

  1. The SFC issued the restriction notice under section 204 and 205 of the SFO.
  2. KGI is a corporation licensed under the SFO to carry on Types 1 and 4 regulated activities.


Page last updated : 27 Sep 2019