In proceedings brought by the Securities and Futures Commission (SFC) of Hong Kong, unemployed retail investor Yeung Desen pleaded guilty to securities fraud for illegal short selling and was convicted at Eastern Magistracy today。

Under section 300 of the Securities and Futures Ordinance, Mr Yeung was convicted of using a fraudulent scheme with intent to defraud in a securities transaction involving illegal short selling, the first case of its kind.。The case stems from the SFC's discovery that Yeung had been involved in a fraudulent scheme to commit a criminal act during an investigation into a short-selling transaction.。

Young was remanded in custody pending sentencing on 20 March 2024。

At the court hearing, it was noted that Yang filed a settlement instruction form with her broker, Aristo Securities Limited, on 28 May 2020, claiming that she held 15 million shares in Hong Kong-listed Aurum Pacific (China) Group Limited at another brokerage house, but that she did not in fact hold such shares.。Broker misled, allowed Yeung to sell shares in Aurum ahead of alleged share transfer settlement。

At the time of filing the settlement instruction form and selling the shares, Yeung did not hold any Aurum shares。After illegally shorting Aurum shares, she bought back the same number of shares at a lower price on the same day to cover her short selling position。As a result, she illegally made a profit of about $602,600.。

SFC reminds intermediaries of their responsibility to implement and maintain adequate measures to comply with short selling requirements and to heed warnings indicating illegal short selling by their customers。