SFC Issues Restriction Notice on Man Lung Hong Securities Limited

The SFC has today issued a restriction notice on Man Lung Hong Securities Limited to preserve the assets of the company and its clients, and to protect the interests of these clients and the investing public.

Man Lung Hong is engaged in the business of securities dealing. It has about 750 active cash clients and does not engage in securities margin financing (Note 1).

The restriction notice is issued pursuant to sections 204 and 205 of the Securities and Futures Ordinance to prohibit Man Lung Hong from carrying on all activities for which it is licensed, disposing of or dealing with any assets held by it or held on behalf of its clients, and assisting, counselling or procuring another person to dispose of or deal with any such property without the SFC’s prior written consent.

The SFC action follows the reporting by Man Lung Hong of the misappropriation of certain client assets by a licensed representative of the firm. An initial investigation indicates that management of the firm may have identified some earlier misappropriation of client assets which had been concealed from both clients and the SFC. Based on our initial enquiries we do not have confidence in the firm’s internal control and believe that client assets are at risk.

The above calls into serious doubt the integrity of the firm and its fitness and properness to remain licensed. The SFC therefore considers that the issue of a restriction notice is desirable in the interest of the investing public or in the public interest.

The SFC will continue to investigate the circumstances of this case to determine what further regulatory actions may be necessary. Further announcements on this matter will be made when appropriate.

Clients of Man Lung Hong who have any enquiries may contact the SFC at its Investor Hotline at 2840 9333. A list of questions and answers for clients is attached

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Notes:

1. Man Lung Hong is licensed under the SFO to carry on business in Type 1 regulated activity (dealing in securities).