Parkside Chambers’ Jonathan Ah-weng acted for the prosecution in this case which culminated in the first ever immediate jail sentence for an unlicensed person holding out as carrying on a business in a regulated activity under s114(1)(b) of the Securities and Futures Ordinance (SFO) Cap 571.
D, an unlicensed person, offered to deal in securities for a friend, PW1, with a profit sharing element. Both were university students. As a result, PW1 advanced to D $100,000, but eventually D only returned $2,000. At the trial, D asserted that her activity for PW1 was not a business (and she never held out to do so). D referenced the 25 indicia in the CFA case of Lee Yee Shing v Commissioner of Inland Revenue (2008), which were used to determine whether an activity amounts to a business dealing in securities. Ultimately D was convicted and sentenced to two weeks imprisonment.
In the reasons for verdict, the Court accepted the Prosecution’s submissions that whilst the 25 indicia in the CFA case were helpful as reference, they are not required to be proved to establish an offence under s.114(1)(b) of the SFO.
This case highlights the scope and limits of the “holding out” offence and its interaction with the CFA case, and serves as a critical reminder of the boundaries of legitimate activities surrounding securities transactions.
A link to the case that Jonathan acted in appears below: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=24PR185
