The Court of First Instance orders boiler room fraudsters to compensate investors

The Court of First Instance orders boiler room fraudsters to compensate investors

The Court of First Instance orders boiler room fraudsters to compensate investors 1400 788 Hugo

On 12 May 2021, the Court of First Instance granted orders sought by the Securities and Futures Commission (“SFC”) against boiler room fraudsters to compensate 75 investors who fell victim to the scams.

The factual matrix is that there were three unlicensed entities purportedly based in and operating from Hong Kong, namely (1) Broadspan Securities, (2) Shepherds Hill Partners and (3) Rich Futures (HK) Limited. The three unlicensed entities solicited investors through cold calls, to open trading accounts on their websites and to invest in securities and/or futures in 2014. They also asked investors to deposit funds purportedly for their investments into six bank accounts in Hong Kong.

Upon investigation, it was found that none of the investments in securities and/or futures products agreed with the investors were ever executed on any recognized exchange, nor were these investors able to recover any of their monies.

In light of the above, the Court granted judgments in default of defence against the defendants and made declarations on 12 May 2021 that the three unlicensed entities had contravened sections 109, 114 and 300 of the Securities and Futures Ordinance for (i) issuing advertisements in which they held themselves out as being prepared to carry on the specified regulated activities, whilst unlicensed and unregistered; (ii) holding themselves out as carrying on business in regulated activities whilst unlicensed and unauthorized; and (iii) employing a device, scheme or artifice with intent to defraud or deceive and/or engaged in an act, practice or course of business which was fraudulent or deceptive or would operate as a fraud or deception.

Furthermore, the Court appointed administrators to receive and distribute the proceeds of the boiler rooms frauds remaining in the six bank accounts under the names of the three unlicensed entities –a sum of approximately $4.3 million – for the benefit of the investors on a pro rata basis.

A copy of the Judgment is available on the Judiciary’s website.

If you need any advice on recovering funds from boiler room fraudsters, please contact us for a discussion today.

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