Under SFO, “investment products” are broadly classified into three categories, namely, securities, collective investment schemes (CIS) and regulated investment agreements (RIA). Unless otherwise exempted, issuance of advertisements in relation to investment products to HK investing public without SFC authorization is prohibited. While this requirement is well known to investment professionals, people outside the securities industry.
SFC recently prosecuted Centaline (China) Property Consultants Ltd, Dalian Victory Plaza Development Company Ltd (a PRC company) and Mr Lee King Fung for issuing advertisements relating to a CIS without SFC authorization. In May and Aug 2005, Centaline (China) and Dalian Victory posted advertisements in their respective websites to promote an investment scheme in relation to the sale of shop units in Dalian Victory Plaza (the Plaza) in China (the Scheme). Centaline (China) also distributed various promotion leaflets of the Scheme, while Dalian Victory issued advertisements in some local newspapers, stations and carriages of MTR and KCRC.
The Plaza was developed by Dalian Victory which appointed Centaline (China) to act as the exclusive sales agent to promote the Scheme. Lee was the most senior officer in Centaline (China) responsible for the promotion of the Scheme.
Property developers and promoters often confuse ordinary property investments with an investment scheme. In 2003, there was a similar case happened for Midland (China) Property Development Ltd. In that occasion, SFC advised promoters to take a legal advice before launching such a scheme and indicated its willingness to assist promoters by discussing in advance the particular terms of any scheme.
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