Hong Kong’s Securities and Futures Commission (SFC) announced today that it has reprimanded and fined Ample Capital Limited (ACL) $5.5 million. According to SFC, the authority has imposed a fine on Ample Capital Limited for failing to discharge its duties as the sponsor in the listing application of COCCI International Limited (COCCI) between 2016 and 2017.
In an official announcement, SFC mentioned that it has suspended the license of Howard Tang Ho Wai, the responsible officer, for 17 months from 15 October 2021 to 14 March 2023. The SFC outlined that during the due diligence, the authority identified several red flags.
According to SFC, the Distributor made cash settlements totaling RMB9.72 million to COCCI between March and June 2016 through various third parties. The Securities and Futures Commission mentioned that parties sometimes conduct settlements through cash to disguise the original source of funds.
“However, ACL failed to critically assess the reasons behind the third party cash Settlement arrangement, nor did it conduct any independent due diligence to ascertain the truth and completeness of COCCI’s representations in this respect. ACL also failed to maintain any records to demonstrate the due diligence it had conducted, including its alleged discussions with COCCI’s directors and reporting accountants regarding the third-party cash settlement arrangement,” the SFC mentioned.
Since the start of 2021, the SFC has expanded its efforts significantly to eliminate illegal financial activities. In August 2021, the SFC and the Independent Commission Against Corruption (ICAC) launched a joint operation and arrested five individuals for illegal financial activities.
Due Diligence
In the recent announcement, the SFC highlighted the importance of due diligence in the growing financial sector. The authority added that the lack of due diligence will create several issues for the companies.
“ACL had performed minimal due diligence regarding the sales of COCCI’s products in Saudi Arabia before submission of the listing application. While ACL had attended a telephone interview (conducted by COCCI’s reporting accountants) with a major Saudi Arabian customer of the Distributor, ACL did not seek to obtain any objective data to verify information provided by the customer, nor did it conduct an independent search on the customer’s background and scale of operations in Saudi Arabia,” SFC added.
