Securities and Futures Commission v. Lui Man Wah and Others

HCA 1450/2025

[2026] HKCFI 2140

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1450 OF 2025

_______________

BETWEEN

_______________

__________________

D E C I S I O N

__________________

1.These proceedings relate to a “ramp-and-dump” scheme (“the Scheme”) concerning the manipulation of the market for shares in Grand Talents Group Holdings Limited (“Grand Talents”) (stock code: 8516) between 16 June 2021 and 15 June 2022 (“Relevant Period”). This is the application of the Plaintiff (“SFC”) for interim injunctive relief restraining D2, D4, D5, D9, D11 and D14 from dealing with their certain assets pending the determination of these proceedings against them under s.213 of the Securities and Futures Ordinance (“SFO”), and ancillary disclosure orders.

A.  THE RELEVANT BACKGROUND

2.Grand Talents is a company incorporated in the Cayman Islands and the holding company of a group of companies principally specialising in the repair and maintenance of roads and highways in Hong Kong. Its shares were first listed on the GEM board of the Stock Exchange of Hong Kong on 15 October 2018 by way of an initial public offering and placing.

3.Imperium International Securities Limited (“Imperium”) was the sole bookrunner and one of the joint lead managers in Grand Talents’ initial public offering and placing in 2018. D1 was at all material times a responsible officer of Imperium.

4.At all material times, the single largest shareholder in Grand Talents was D4, a private company incorporated in the BVI owned by D2 and Ip Chu Shing (“Ben Ip”) in equal shares. Both were executive directors of Grand Talents. D2 was also the Chairman of the Board of Grand Talents and Ben Ip served as its Chief Executive Officer.

5.On 16 June 2021, Grand Talents announced the placing of 91.2 million new shares (representing 19% of its then issued share capital) at HK$0.105 per share (representing a 17% discount to its prevailing market price) with Lego Securities Limited (“LSL”) as the placing agent (“1^st Placing”). LSL was to procure no fewer than 6 independent third parties to subscribe for placing shares in the 1^st Placing.

6.On 5 July 2021, Grand Talents announced the completion of the 1^st Placing. A total of 8 placees subscribed for and were allotted shares in the 1^st Placing.

7.On 24 November 2021, Grand Talents announced a proposal to (1) consolidate every 10 existing shares into 1 consolidated share (“Share Consolidation”), (2) adjust the board lot size from 1,000 existing shares to 5,000 consolidated shares (“Board Lot Adjustment”), and (3) place 57.1 million new consolidated shares (representing 99.96% of its issued share capital after the Share Consolidation) at a price of HK$0.535 per share (representing a 30% discount to the prevailing market price) with LSL as the placing agent and Lego Corporate Finance Limited (“LCFL”) as the financial adviser (“2^nd Placing”). LSL was to procure no fewer than 6 independent third parties to subscribe for placing shares in the 2^nd Placing.

8.On 24 December 2021, an EGM of Grand Talents was held at which the Share Consolidation, the Board Lot Adjustment and the 2^nd Placing were approved. The Share Consolidation and Board Lot Adjustment took effect on 29 December 2021.

9.On 8 February 2022, the 2^nd Placing was completed. A total of 14 placees subscribed for and were allotted shares.

10.Prior to 12 January 2022, Grand Talents shares traded in the region between HK$0.68 and HK$1.54, with average daily trading volume was approximately 0.08 million shares (both figures adjusted for the Share Consolidation).

11.Between 12 January 2022 and 12 April 2022, Grand Talents shares traded in the region between HK$0.8 and HK$4.02, with an average daily trading volume of approximately 0.53 million shares. Its closing price rose steadily from HK$0.78 on 11 January 2022 to HK$4 on 12 April 2022 (an increase of 413%).

12.Between 13 April 2022 to 14 June 2022, Grand Talents shares traded in the region between HK$3.6 and HK$6.9, with an average daily trading volume of approximately 5.58 million shares. Its closing price rose steadily from HK$4 on 12 April 2022 to HK$6.02 on 14 June 2022 (an increase of 51% over its closing price on 12 April 2022, or an increase of 672% over its closing price on 11 January 2022).

13.On 15 June 2022, the share price of Grand Talents fell to close at HK$0.43 (a decrease of about 93% from its previous closing price). Trading volume in Grand Talents was substantially higher that day, with a total of 122,791,000 shares traded.

14.After 15 June 2022, the price of Grand Talents never recovered to any level like that seen in the period between 12 January 2022 and 15 June 2022. They traded in the region between HK$0.08 and HK$0.405, and closed at HK$0.16 on 30 June 2025.

15.According to the SFC:

(1)  Investigations commenced in September 2022 and June 2023 as to whether acts or offences of false trading, price rigging, stock market manipulation and fraudulent/deceptive acts were committed around the period from 24 November 2021 to 15 June 2022 contrary to ss. 274, 275, 278, 296, 299 and/or 300 of the SFO.

(2)  Through its investigations, the SFC discovered that suspect traders (including D4 to D16) (“Suspect Traders”) were related to the masterminds of the Scheme (namely D1 to D3) and dealt in Grand Talents shares in the Relevant Period and/or perpetrated the Scheme.

(3)  The SFC instructed its internal market expert, Mr Gary Hui (“Mr Hui”), to analyse the movement of Grand Talents’ share price in the period from 12 January 2022 to 15 June 2022. Mr Hui opines, amongst other things, as follows:

(a)  There were no significant events which materially affected the general sentiment and/or the market for Grand Talents in that period.

(b)  The only announcement which appeared to have a material impact on the shares of Grand Talents was the completion of the 2^nd Placing on 8 February 2022. However, whilst a placing of new shares would typically be regarded as a negative news given the dilutive effect, Grand Talents’ share price increased 43% to close at HK$1.57m on 9 February 2022 as compared with the previous close of HK$1.1 on 8 February 2022.

(c)  Save as aforesaid, there was no particular price sensitive news about Grand Talents during the period from 12 January 2022 to 15 June 2022. It would therefore appear that trading in the market of Grand Talents shares was not triggered by any price sensitive information relating to Grand Talents.

(4)  The SFC believes that the trading patterns in Grand Talents’ shares between 12 January and 15 June 2022 was not the result of any external events or news specific to Grand Talents, and there were no news or announcements which might have led to a sudden and substantial drop of the Grand Talents’ share price on 15 June 2022.

(5)  Mr Hui further concludes that:

(a)  the Suspect Traders made a total profit of HK$330,234,089;

(b)  based on the currently available information, it is estimated that 748 market investors (“Innocent Market Investors”) incurred losses totalling HK$394,067,589 from trading in Grand Talents shares in the period from 12 January 2022 to 15 June 2022.

16.The SFC has received 16 complaints from retail investors (“Complainants”) stating that they were solicited to purchase Grand Talents shares from 13 April 2022 to 14 June 2022 by scammers who disseminated purported investment advice on various social media platforms including WhatsApp and Facebook. The losses suffered by the Complainants amount to approximately HK$22 million.

17.In April 2023, the SFC issued and served restriction notices (“RNs”) under ss. 204 and 205 of the SFO to various securities firms to restrain them from permitting 23 Suspect Traders from operating a total of 31 securities accounts held with them. Amongst these accounts, 16 accounts belong to 9 Defendants and the latest total asset is around HK$24.9 million.

18.Following the issue of the RNs in April 2023 and through further investigation, the SFC identified an additional 51 securities accounts belonging to 12 Defendants. 25 of these securities are maintained with securities which are already subject to the RNs issued in April 2023, while 26 are maintained with other securities firms.

19.As at August 2025, the SFC has issued additional RNs and varied the existing RNs to cover the 51 additional securities accounts. The latest total value of the additional restrained securities accounts is around HK$17.4 million.

20.On 6 August 2025, the SFC issued the writ herein. On the same day, it took out the summons for injunctions against all the Defendants (“the Summons”). The Summons came before DHCJ Grace Chow on the Summons Day on 19 September 2025. D6, D7, D8 and D15 did not oppose the application and an injunction order to restrain each of them from removing from Hong Kong or dealing with their assets up to the value of HK$394,067,589 was made. Moreover, the Summons against D3, D14 and D16 was adjourned upon an undertaking given by each of them to the court. D14’s undertaking (“D14’s Undertaking”) was that the proceeds arising from the sale of his landed property in Hong Kong be transferred or deposited into a stakeholder’s account maintained with his solicitors until the final determination of the Summons or further order of the court.

21.As to the other Defendants:

(1)  the SFC has not yet been able to effect service of the proceedings on D1;

(2)  an injunction order has been made by consent to restrain each of D3, D10 and D16 from removing from Hong Kong or dealing with their assets up to the value of HK$394,067,589, and to disclose their assets in Hong Kong which are of an individual value of HK$50,000 or more;

(3)  the SFC has agreed with D12 and D13 on the terms of an undertaking and the SFC has withdrawn the Summons against them.

B.  APPLICATION FOR INJUNCTIONS

22.The SFC’s injunction application is brought under (1) s.213(6) of the SFO and (2) the Court’s Mareva jurisdiction under s.21L of the High Court Ordinance (Cap 4). It is my understanding that the SFC relied on s.213 as the primary basis for seeking the injunctions and the ancillary disclosure orders.

B1.  The SFC’s Amendment Application

23.On 12 December 2025, the SFC applied for leave to amend its Summons to amend the draft order annexed to the Summons as against D2, D4, D5, D9, D11 and D14, and to seek a disclosure order against each of them (“Amendment Summons”).

24.The SFC explained that the purpose of the amendment is to narrow the scope of the prohibition against each of the defendants in question to their real properties and/or the monies in the securities accounts as listed in the schedule in the draft order, and to require them to disclose their assets in Hong Kong.

25.In the skeleton filed on behalf of D14 before the hearing, a question was raised as to whether the SFC was seeking an injunction to restrain the defendants from dealing their assets up to HK$394 million odd, or was merely prohibiting dealings with respect to the assets identified in the schedule of the draft order. I considered this to be a well-founded query and expressed my view at the hearing that the proposed terms were not sufficiently clear.

26.As a result, the SFC confirmed that it is its intention to (1) obtain an order at the trial to require each of the defendants to pay damages to the market investors (currently estimated to be HK$394,067,589) and (2) restrain the relevant defendants at this stage from dealing with the specific assets mentioned in the schedule of the draft order, and also to seek a disclosure order. The SFC then provided the court with two revised versions of the proposed draft order of the injunction. I will return to these proposed amendments later in this decision

B2.  The Relevant Statutory Provisions and Legal Principles

27.S.213 of the SFO relevantly provides as follows:

“(1) Where

(a) a person has

(i) contravened (A) any of the relevant provisions; …

(ii) aided, abetted, or otherwise assisted, counselled or procured a person to commit any such contravention;

(iii) induced, whether by threats, promises or otherwise, a person to commit any such contravention;

(iv) directly or indirectly been in any way knowingly involved in, or a party to, any such contravention; or

(v) attempted, or conspired with others, to commit any such contravention;

…

the Court of First Instance, on the application of the Commission, may, subject to subsection (4), make one or more of the orders specified in subsection (2).

(2) The order specified for the purpose of subsection (1) are

(a) an order restraining or prohibiting the occurrence or the continued occurrence of any of the matters referred to in subsection (1)(a)(i) to (v);

(b) where a person has been, or it appears that a person has been, is or may become, involved in any of the matters referred to in subsection (1)(a)(i) to (v), whether knowingly or otherwise, an order requiring the person to take such steps as the Court of First Instance may direct, including steps to restore the parties to any transaction to the position in which they were before the transaction was entered into;

(c) an order restraining or prohibiting a person from acquiring, disposing of, or otherwise dealing in, any property specified in the order;

…

(g) any ancillary order which the Court of First Instance considers necessary in consequence of the making of any of the orders referred to in paragraphs (a) to (f).

…

(4) The Court of First Instance shall, before making an order under subsection (1) or (3A), satisfy itself, so far as it can reasonably do so, that it is desirable that the order be made, and that the order will not unfairly prejudice any person.

…

(6) Where the Court of First Instance considers it desirable to do so, it may grant such interim order as it considers appropriate pending the determination of an application made pursuant to subsection (1) or (3A).”

28.In SFC v Tiger Asia Management LLC (2013) 16 HKCFAR 324, Lord Hoffmann NPJ at [16] described the nature of s.213 proceedings and the SFC’s role therein as follows:

“Section 213 … provides remedies for the benefit of parties involved in the impugned transactions. They include injunctions and the appointment of receivers to secure property with a view to recovery by the victims of market misconduct, orders that particular transactions be unwound, orders declaring particular transactions to be void or voidable. In these proceedings the SFC acts not as a prosecutor in the general public interest but as protector of the collective interests of the persons dealing in the market who have been injured by market misconduct. Proceedings under s.213 are the public law analogue of actions for damages by individuals under s.305 rather than a substitute for a criminal prosecution or proceedings before the MMT. …”

29.S.213 confers very wide powers on the courts. In SFC v Qunxing Paper Holdings Co Ltd (No 2) [2018] 1 HKLRD 1060, G Lam J at [54] said:

“The width of the section and of the powers it confers on the court are ‘characterised by their extreme flexibility’ and ‘should not be judicially cut down' (Securities and Investments Board v Scandex Capital Management A/S [1998] 1 WLR 712, 723B, 726B). Its terms permit an order to be made against a person if he has been involved in any of the matters referred to in s.213(1)(a)(i)–(v) — these categories of persons are not necessarily themselves parties to the transactions in question. They may be persons who have aided or abetted a contravention or simply a person who has been involved in it.”

30.S.213 also provides a wide range of remedies to the SFC. The reasons were given by Le Pichon JA in SFC v C [2009] 4 HKLRD 315 at [34] and [35] as follows:

“It is noteworthy that the Ordinance conferred on the SFC an array of powers and provided the SFC with a range of remedies, no doubt, to facilitate the attainment of the SFC’s regulatory objectives and render more effective the discharge of its statutory functions. Of its nature, proceedings involving the SFC are necessarily different from actions between private individuals because the SFC is a public body with statutory duties to discharge and there can be no private rights between the SFC and the defendants.

It is against that backdrop that the range of remedies contained in section 213(2) has to be considered. Indisputably, those remedies were created by statute and are intended or designed to provide substantive relief to address specific types of wrongdoing (identified in section 213(1)) the regulator may encounter in the course of discharging its statutory functions. Section 213(1) empowers the court to make a range of substantive orders on the application of the SFC if the SFC is satisfied that the contravention of any of the relevant provisions (defined to mean the provisions of the Ordinance and certain provisions of the Companies Ordinance) ‘has occurred, is occurring or may occur.’”

31.Where the requirements in s.213 are satisfied, the court may grant a permanent injunction (s.213(2)(c)) or an interim injunction pending the determination of a s.213 application (s.213(6)). S.213 is sufficiently wide to give the court power to grant a Mareva-type injunction: SFC v C above at [28] (Le Pichon JA).

32.In SFC v A [2008] 1 HKC 89, drawing from authorities in Australia and Singapore, Kwan J laid down some important principles for the grant of a statutory interim injunction under s.213, which may be summarised as follows.

(1)  The SFC must establish a prima facie case that s.213(1) of the SFO is engaged: [28].[1]

(2)  There is an appreciable, not a fanciful, risk that without the injunction, proper compliance under the SFO would be frustrated: [28].

(3)  In considering whether it is desirable that an interim injunction should be made, the court should ask if the injunction would have some utility or serve some purpose within the contemplation of the SFO: [26].

33.As far as utility of the interim injunction is concerned, the circumstances which may move the court to grant the injunction in the exercise of the statutory power cannot be circumscribed: Australia Securities and Investments Commission v Mauer-Swisse Securities Ltd (2002) 42 ACSR 605 at [11] (Palmer J).

34.It was further said by Kwan J in SFC v A (above) at [27] that the traditional equitable principles that govern the granting of interlocutory injunctions (such as whether there is a serious question to be tried, the risk of dissipation of assets to defeat a judgment, and where the balance of convenience lies) do not limit the scope of the exercise of the statutory power, but these traditional principles of equity nevertheless provide a sound basis for a preliminary assessment.

B3.  Whether the SFC has Established a Prima Facie Case that S.213 is Engaged

B3a.  The SFC’s case

35.It is the SFC’s case that:

(1)  D1, D2 and D3 orchestrated the Scheme and together with D4 to D16 and other associated individuals (collectively “the Syndicate”) and entities carried out and participated in the Scheme;

(2)  all 22 placees who subscribed for Grand Talents shares in the Placings were Suspect Traders associated with the masterminds, and comprised (a) “the Alvin Lui Group” (associated with D1, including D6, D7, D8, D9, D10, D11, D13), (b) “the Nancy Wang Group” (associated with Nancy Wang, a business associate of D1), and (c) “the Talent Prime Group” (associated with D2 and D3, including D15 and D16).

(3)  the SFC searched LCFL’s office on 25 April 2023 and seized an undated Excel spreadsheet, which showed that 7 Suspect Traders were allotted with Grand Talents shares in the 2^nd Placing were classified under “AL” (which SFC believes is a reference to “Alvin Lui”), including D6, D7, D9, D13, D15 and D16;

(4)  the price movements of Grand Talents’ share price from 12 January 2022 to 15 June 2022 were due to the implementation of the Scheme;

(5)  from June 2021 to February 2022, or during stage 1 (cornering stage):

(a)  D1 arranged the Placings by (i) introducing LSL/LCFL to Grand Talents, (ii) discussing the terms of the placing agreement on behalf of Grant Talents, and (iii) making decisions and giving instructions regarding the Placings;

(b)  D1, D2 and D3 further arranged for various Syndicate members to open accounts with LSL and provided them with funds to subscribe to subscribe for Grand Talents shares in the Placings;

(c)  as a result of the Placings, the Syndicate acquired a substantial stake in Grand Talents (73% of its total issued shares) at discounted prices;

(6)  from 12 January 2022 to 12 April 2022, or during stage 2 (price rally stage):

(a)  the Syndicate members purchased a total of 19,925,000 Grand Talents shares (accounting for 61% of market purchase), and sold a total of 7,045,000 Grand Talents shares (accounting for 22% of market sell);

(b)  on 7 trading days, Grand Talents’ closing price rose by 12% to 43%, which appeared to have been caused by the Alvin Lui Group and Nancy Wang Group (collectively accounting for 53% of market purchase and 6% of market sell), and of the purchase orders placed by them on such days, 41% were “aggressive” in that bid price was equal to or higher than the best offered price in the market, resulting in immediate execution either partially or in full;

(c)  chat records seized by the SFC show that D3 coordinated trades amongst the Talent Prime Group to ramp up the price of Grand Talents shares;

(7)  from 13 April 2022 to 14 June 2022, or during stage 3 (offloading stage):

(a)  the Syndicate members purchased a total of 45,765,000 Grand Talents shares (accounting for 20% of market purchase), and sold 128,613,700 Grand Talents shares (accounting for 58% of market sell), and around 74% of the sell orders were “aggressive” in that the selling price was equal to or lower than the best offered price in the market, such that they were immediately executed either partially or in full;

(b)  when the bulk offloading caused a drop in the share price, the Alvin Lui Group and the Nancy Wang Group pushed the share price back up by selling Grand Talents shares to other market participants at low prices during the day and buying back the shares at higher prices near the end of the day, which had a positive impact on the share price of Grand Talents;

(c)  it appears that the dissemination of the purported investment advice sent to the Complainants was synchronised with various Syndicate members’ disposal of Grand Talents shares and the SFC believes that the Syndicate members were aware of and coordinated with the scammers as part of the Scheme;

(8)  on 15 June 2022, or during stage 4 (dumping stage):

(a)  shortly after the market opened on 15 June 2022, the share price of Grand Talents plunged to HK$0.30 due to a lack of bid orders, and 7 Syndicate members dumped a total of 7,464,800 Grand Talents shares, after which the Syndicate continued to hold only 8,381,800 shares (8.5% of what they collectively held immediately before stage 3);

(b)  Grand Talents’ share price closed at HK$0.43, which was 93% lower than the closing price of HK$6.02 on the previous day;

(9)  there is further evidence showing that during stages 2 and 3, the Syndicate members:

(a)  coordinated their trading activities with, and reported their trades to, each other;

(b)  placed orders with identical IP addresses or lent their accounts to other Syndicate members;

(c)  transferred funds to other Syndicate members to subscribe for shares in the Placings or to trade in Grand Talents shares;

(d)  withdrew physical scrip certificates and transferred them to other Syndicate members by way of bought and sold notes without any settlement of consideration; and

(e)  transferred the sale proceeds from the sale of Grand Talents shares to or for the benefit of D1, D2, D3, D6 and D7.

(10)  there is specific evidence showing the involvement of D2, D4, D5, D9, D11 and D14 in the Scheme.

36.On the evidence before the court, the SFC submitted that there is at least a prima facie case that each of the Defendants participated in the Scheme and has contravened ss. 274(1), 274(3), 295(1), 295(3) and 300 of the SFO. The following submissions were also advanced.

(1)  The Syndicate’s trades in stages 2 and 3 had a positive price impact of HK$2.3 (295% over its immediately prior closing price) and HK$1.87 (46.8% over its immediately prior closing price) respectively. As such, there is at least a prima facie case that the Syndicate members created or maintained an “artificial price” for Grand Talents shares (and by necessary implication a “false or misleading appearance with respect to the market for, or the price for” Grand Talents shares).

(2)  The prices created were artificial and false or misleading in that they did not “reflect the forces of genuine supply or demand”.

(3)  The Syndicate’s trading in Grand Talents shares also necessarily inflated the trading volume in Grand Talents shares and increased its perceived liquidity.

(4)  The Syndicate intended to bring about these consequences (or were reckless as to whether their trading had this effect). Both the manipulation of Grand Talents’ share price and the increase in perceived market liquidity were essential parts of the Scheme.

(5)  The Scheme was a “fraudulent or deceptive device” in that it did not reflect genuine supply or demand but were effected for purposes of increasing the price and trading of Grand Talents shares to artificial levels. There is at least a prima facie case that the Syndicate had the necessary intent to defraud or deceive by devising and implementing the Scheme.

37.Further or alternatively, the SFC submitted that there is at least a prima facie case that the Defendants conspired to commit and aided or abetted the commission of the contraventions within the meaning of ss.213(1)(a)(ii) and 213(1)(a)(v), or were knowingly or unknowingly involved in the contraventions within the meaning of ss.213(1)(a)(iv) and/or 213(2)(b).

38.The SFC claims, among other things, restoration orders to return the relevant parties to the position they were in before the trades and/or compensation orders for the losses caused to the Innocent Market Investors on the basis of ss. 213(2)(b) and 213(8) of the SFO. The SFC’s present calculations are that the estimated losses suffered by the Innocent Market Investors are no less than HK$394,067,589. The SFC submitted that (1) it is desirable for such monetary orders to be made as it would be contrary to the legislative purpose of the SFO in protecting the investing public and minimising market misconduct for those who have suffered a loss as a result of such conduct to be left out of pocket, and (2) such orders cannot be said to “unfairly prejudice” the Defendants as such losses are directly caused by their wrongful conduct in the involvement of the Scheme.

B3b.  D2’s and D4’s contentions

39.At the material times, D2 was (1) the chairman of the board and an executive director of Grand Talents, (2) a director of D4, (3) a client of Imperium and (4) a business partner of D3. D4 was the single largest shareholder of Grand Talents.

40.In the Defence filed on behalf of D2 and D4, their positions are as follows:

(1)  they deny that they had knowledge about the Scheme and that they had been involved in it in contravention of the SFO;

(2)  despite his acquaintance with D1 and D3, D2 has no association with them and any of the members of the Talent Prime Group concerning the sale and purchase of Grand Talents shares;

(3)  the Placings, Share Consolidation and Board Lot Adjustment were the collective decisions of D4’s board upon professional advice and were carried out for legitimate business purpose;

(4)  D2 has never given any directions or provided fundings to placees for the subscription of Grand Talents shares, and the funds provided to any third party were not pursuant to the Scheme;

(5)  the trading in Grand Talents shares through D4 were the joint and independent commercial decisions made by D2 and Ben Ip as equal owners of D4.

41.D2 and D4 submitted that the SFC has no good arguable case against them because (1) there is no direct and cogent evidence to substantiate that D2 was one of the masterminds of the Scheme, (2) the Placings were carried out as a result of D4’s board decisions and for legitimate business purpose, and (3) there is no justification for the SFC to restrain the assets of D2 and D4 up to HK$394,067,589.

42.In my view, despite these submissions, I consider that the SFC has demonstrated a prima facie case against D2 and D4 for the purpose of the present application.

43.First, for the purpose of discharging its burden, it is sufficient for the SFC to identify evidence to establish a prima facie case against each of D2 and D4, which has been summarised in paragraphs 40.1 and 40.2 of the SFC’s skeleton submissions and is in my view sufficiently cogent. Contrary to the submissions of D2 and D4, it is unnecessary at this stage of the proceedings for the SFC to produce direct evidence that D2 was the mastermind of the Scheme, or that D2 was directly involved in every stage of the Scheme.

44.Second, it is clear from how the SFC formulates its case that the Scheme did not only involve the Placings. The SFC’s case is that the real reasons behind the Placings (and other steps), and their effect, were to facilitate the implementation of the Scheme by the Syndicate. D2’s focus on the purpose of the Placings and how they were carried out does not in my view undermine the SFC’s prima facie case against D2 and D4.

45.Third, as far as the SFC’s case on quantum is concerned, the SFC seeks a monetary judgment at trial against each for the Defendants on the basis of the loss suffered by the investors on the basis of ss. 213(2)(b) and/or 213(8) of the SFO, which is currently estimated to be not less than HK$394,067,589. It seems to me that the SFC has established a prima facie case on quantum that each of the Defendants is liable up to the total amount of loss suffered by the Innocent Market Investors.

(1)  S.213(2)(b) of the SFO permits the court to make a “restorative” order, “requiring the person to take such steps … including steps to restore the parties to any transaction to the position in which they were before the transaction was entered into”. The terms of s.213(2)(b) have been described as “very wide indeed”: SFC v Qunxing Paper Holdings Co Ltd (No 2) (above) at [52]. At [54], G Lam J said that the “width of the section and of the powers it confers on the court are ‘characterised by their extreme flexibility’ and ‘should not be judicially cut down’.”

(2)  Further, his Lordship at [56] said:

“Not only is s.213(2) striking in its width, it is also remarkable in that the cause of action it creates appears to be discretionary. Section 213(1) confers a discretion on the court by providing that it ‘may’, on the application of the Commission, make one or more of the orders specified in sub-s.(2). The jurisdiction arises once the court finds that the matters set out in s.213(1)(a) have occurred. The only express fetter on this discretion is sub-s.(4), which requires the court to satisfy itself on two matters, “so far as it can reasonably do so”, before making an order, namely, (i) that it is desirable that the order be made, and (ii) that the order will not unfairly prejudice any person.”

(3)  S.213(4) of the SFO provides that “[the] Court of First Instance shall, before making an order under subsection (1) or (3A), satisfy itself, so far as it can reasonably do so, that it is desirable that the order be made, and that the order will not unfairly prejudice any person”.

(4)  In relation to the concepts of “desirability” and “fairness” in s.213(4), G Lam J in SFC v Qunxing Paper Holdings Co Ltd (No 2) (above) at [57] said that “[d]esirability and fairness are highly general concepts which do not lend themselves to definition or precise exposition. A fairly broadbrush approach has to adopted where necessary.”

(5)  Further, in the context of discussing s.213(2)(c) (the provision giving power to the court to restrain or prohibit “a person from acquiring, disposing of, or otherwise dealing in, any property specified in the order”), Kwan J in SFC v A (above) at [23] said that the “value of the property to be subject to restraint would be by reference to the anticipated action that may be taken regarding the breach, and may include both the elements of profits and penalty, as these consequences are not mutually exclusive”.

(6)  I have borne in mind the relevant provisions in s.213 and the observations made in the above authorities. As the “protector of the collective interests of the persons dealing in the market who have been injured by market misconduct” (using the words of Lord Hoffmann NPJ in Tiger Asia Management LLC at [16]), there is a reasonable argument that it is desirable for each of the persons involved in the market misconduct to be liable for the total amount of the loss collectively suffered by the investors. It is also reasonably arguable that such an order would not unfairly prejudice such a person because of his/her involvement in the relevant market misconduct.

(7)  At this stage, I am not persuaded by the arguments raised by D2 and D4 (and the other defendants) that the extent of how much each defendant should be liable should depend on his/her culpability or involvement, and at most be limited to the realised profits made by him/her in the relevant transactions. Such arguments do not appear to arise out of a proper construction of s.213, or grapple with the observations made in the various authorities regarding the width of s.213. At the present interlocutory stage, they cannot in my view undermine the SFC’s prima facie case on quantum.

B3c.  D5’s contentions

46.At the material times, D5 was D1’s girlfriend and is the mother of D1’s child. She did not contend that the SFC has not crossed the relevant threshold on liability in this injunction application. However, she contended that the SFC has failed to establish a prima facie case on quantum. Specifically, D5 submitted that (1) the SFC is effectively alleging that she was part of a conspiracy encompassing the entire Scheme; (2) the evidence, however, shows that she only had a very limited role, and did not participate, in the entire Scheme; and (3) she should not as a matter of law be liable for the loss caused by the entire Scheme.

47.On the basis of matters summarised in paragraph 40.3 of the SFC’s skeleton submissions, I consider that the SFC has demonstrated a prima facie case against D5 for the purpose of the present application.

48.I am unable to agree that the SFC’s claim against D5 should be treated as a conspiracy claim for the purpose of the present application.

(1)  From the authorities referred to in Section B2 above, it is clear that a s.213 claim is brought by the SFC to discharge its statutory functions and duties. S.213(1) prescribes different scenarios in which the court may exercise its power to make one of more of the orders specified in s.213(2). One of the scenarios is in s. 213(1)(a)(v) and that is where a person has “attempted, or conspired with others, to commit any [contravention in s.213(1)(a)(i)]”.

(2)  In its Statement of Claim, the SFC has pleaded that each of the Defendants is a person within:

(a)  s.213(1)(a)(i)(A) of the SFO in that each of them has contravened ss. 274(1), 274(3), 295(1), 295(3) and/or 300 of the SFO;

(b)  s.213(1)(a)(ii) of the SFO by having aided, abetted, or otherwise assisted, counselled or procured another person or other persons to commit one or more of the contraventions;

(c)  s.213(1)(a)(iii) of the SFO by having induced another person or persons to commit one or more of the contraventions;

(d)  s.213(1)(a)(iv) of the SFO by having directly or indirectly been in any way knowingly involved in, or a party to, one or more of the contraventions;

(e)  s.213(1)(a)(v) of the SFO by having attempted, or conspired with others, to commit one or more of the contraventions; and/or

(f)  s.213(2)(b) of the SFO by having been knowingly or otherwise involved in the matters referred to in s.213(1)(a)(i)(A) and/or ss.213(1)(a)(ii)-(v).

(3)  The SFC has also pleaded a wide range of remedies as prescribed in ss. 213(2)(a), 213(2)(b), 213(2)(c), 213(2)(d) and/or 213(8) of the SFO.

(4)  In these circumstances, it is plain that the claim brought by SFC against D5 is not only confined to a claim which is akin to a common law conspiracy claim. It is therefore inappropriate for the court to treat the SFC’s claim against D5 as if it were alleging that she was part of a conspiracy encompassing the entire Scheme.

49.As to the submission that D5 only had a very limited role and did not participate in the entire Scheme, I repeat what I said in paragraph 45 above. D5’s submission is insufficient to undermine the SFC’s prima facie case on quantum.

50.D5 further relied on a number of English authorities for the general proposition that where a person only participated in part of a larger fraudulent scheme, he/she would not be liable for the loss caused by the entire scheme. It is unnecessary to analyse such authorities because (1) as mentioned earlier, the SFC’s claim under s.213 against D5 is not only confined to a claim analogous to a common law claim of conspiracy, and (2) the SFC only has to establish a prima facie case on quantum as against D5, which the SFC has in my view successfully done so (see paragraph 45 above).

B3d.  D9’s and D11’s contentions

51.At the material times, D9 and D11 were friends of D6, and D11 was also a friend of D7. D9’s and D11’s case is that they were not part of the Scheme, and did not knowingly or recklessly engage in conduct prohibited by the SFO. They contended that their sales and purchases of the Grand Talents shares were the result of their own independent experience and judgment. They submitted that the SFC’s case against each of them is not sufficiently compelling to justify the inference that each of them is liable under s.213 of the SFO as a member of the Syndicate. They further submitted that each of them in any event had a small part to play in the Scheme, and that there is no basis for each of them to be held liable for the entirety of the loss caused by the Scheme.

52.I consider that the SFC has demonstrated a prima facie case against D9 and D11 for the purpose of the present application.

53.First, the matters relied upon by the SFC to support its case against each of D9 and D11 were summarised in paragraphs 40.4 and 40.5 of the SFC’s skeleton submissions. On the basis of such materials, I am satisfied that the SFC has established a prima facie case against each of D9 and D11. Contrary to the submissions of D9 and D11, it is unnecessary to examine in this application whether the SFC has produced sufficient compelling evidence to justify the inferences of fraud or serious misconduct at this stage.

54.Further, for the same reasons as those given in paragraph 45 above, the argument of D9 and D11 that each of them cannot be held liable for the entirety of the loss caused by the Scheme cannot in my view undermine the SFC’s prima facie case on quantum at this stage of the proceedings. I disagree with D9’s and D11’s submission that what Le Pichon JA said at [36] of SFC v C (above) provides support that the proper measure of a restoration order under s.213(2)(b) is the wrongdoer’s profits.

B3e.  D14’s contentions

55.At the material times, D14 was, according to him, Nancy Wang’s cohabitee, and was also known as Victor Wood. Like D5, he did not dispute that the SFC has a good arguable case on liability against him. However, he contended that the SFC does not have a good arguable case on quantum against him. D14 submitted that given that (1) the SFC does not allege that he was one of the masterminds, (2) there is no plea or evidence that D14 knew any of the masterminds or the other defendants and (3) it has not been suggested that D14 was involved in the other stages of the Scheme, there is no basis to hold him liable for the entirety of the market losses.

56.On the basis of matters summarised in paragraph 40.6 of the SFC’s skeleton submissions, I consider that the SFC has demonstrated a prima facie case against D14 for the purpose of the present application.

57.For the same reasons as those given in paragraph 45 above, D14’s argument that he cannot be held liable for the entirety of the loss caused by the Scheme cannot undermine the SFC’s prima facie case on quantum at this stage of the proceedings. Insofar as D14 relied on conspiracy principles to contend that he should not be liable for the whole damage, I repeat what I said in paragraph 48 above.

B4.  Whether Appreciable Risk that Proper Compliance Under the SFO Would Be Frustrated Without the Injunction

58.The second question to be asked is whether there is an appreciable, not a fanciful, risk that without the injunction, proper compliance under the SFO would be frustrated.

59.As Le Pichon JA made it clear in SFC v C (above) at [33], “regulatory objectives and functions and powers of the SFC are to be found in ss.4 and 5 of the Ordinance. One of its regulatory objectives is ‘to minimize crime and misconduct in the securities and futures industry’ (s.4(d)) and one of its statutory functions is ‘to suppress illegal, dishonourable and improper practices in the securities and futures industry’ (s.5(n))”.

60.Further, s.4(c) of the SFO provides that the regulatory objectives of the SFC are to “provide protection for members of the public investing in or holding financial products”. Moreover, s.5(1)(l) of the SFO provides that the SFC’s functions are, so far as reasonably practicable, “to secure an appropriate degree of protection for members of the public investing in or holding financial products…”.

61.Additionally, the range of remedies contained in s.213(2) are “intended or designed to provide substantive relief to address specific types of wrongdoing (identified in s.213(1)) the [SFC] may encounter in the course of discharging its statutory functions”: SFC v C (above) at [35].

62.On the evidence before the court, I have already formed the view that there is a prima facie case that each of D2, D4, D5, D9, D11 and D14 was involved the Scheme by false trading and the use of fraudulent or deceptive devices in relation to the Grand Talents shares under ss.274, 295 and 300 of the SFO, which resulted in substantial losses to the Innocent Market Investors. In my view, the SFC’s underlying claims against each of D2, D4, D5, D9, D11 and D14 involve serious misconduct and reflect adversely on the integrity of each of the defendants, which would point towards an inference of a risk of dissipation of assets: Convoy Collateral Ltd v Cho Kwai Chee [2020] 6 HKC 81 at [53] (Lam VP).

63.Further, a key feature of the Scheme was the use of an extensive network of corporate or individual nominees to serve as placees, traders or fund providers. The SFC’s case is that all these were done to avoid and frustrate detection, investigation and enforcement by the SFC. In these circumstances, I agree with the SFC that the persons involved in the Scheme (including D2, D4, D5, D9, D11 and D14) may be described as persons of low commercial morality and that they are likely to dissipate their assets if no injunctive relief is granted.

64.The SFC submitted that each of D2, D5, D11 and D14 has in fact dissipated his/her assets immediately or shortly becoming aware of the SFC’s enforcements actions against them. However, some rebuttal evidence has been adduced by D2, D5, D11 and D14 on why the relevant payments were made. Given that I have already come to the view that there is a real risk of dissipation assets on the part of D2, D4, D5, D9, D11 and D14, it is unnecessary for me to further examine the particular payments relied upon by the SFC for the present purposes.

65.Nonetheless, as far as D14 is concerned, he admitted that he has breached D14’s Undertaking. Instead of transferring the proceeds of his landed property into a stakeholder’s account maintained with his solicitors, he paid HK$2.44 million from such proceeds to someone whom D14 claims to be an investor in his business and who allegedly threatened D14 for payment. A recent affidavit was made on the first day of the hearing to state that D14 had deposited into his solicitors’ bank account part of what he had paid away. Be that as it may, I consider D14’s breach of his undertaking to the court further indicates his low commercial morality and strengthens the inference of a risk of dissipation of assets.

66.I conclude that there is an appreciable risk that the assets of D2, D4, D5, D9, D11 and D14 may be dissipated. It follows that without the injunctions which are currently sought by the SFC, there is in my view an appreciable risk that the SFC would not be able to fully fulfil its statutory functions to obtain sufficient compensation for the Innocent Market Investors.

B5.  Whether the Injunction Would Have Utility or Serve Some Purpose Within the Contemplation of the SFO

67.The third question to be asked is whether it is desirable that an interim injunction should be made, and whether the injunction would have some utility or serve some purpose within the contemplation of the SFO.

68.As mentioned earlier, the SFC has sought to amend the Summons to restrain each of D2, D4, D5, D9, D11 and D14 from dealing with the specific assets mentioned in the schedule of the draft order. The specific assets are (1) D2’s assets in one securities account and one landed property in Hong Kong, (2) D4’s assets in one securities account, (3) D5’s assets in two securities accounts, (4) D9’s assets in two securities accounts and one landed property in Hong Kong, (5) D11’s assets in 10 securities accounts and (6) D14’s assets in two securities accounts.

69.When the proposed revised amendments were introduced at the hearing, the SFC sought to omit the maximum sum (namely HK$394,067,589) from the injunction, relying on S Gee QC Commercial Injunctions (7^th ed, 2022) §21-032. However, as the learned author stated in that passage, the practice is to make a freezing injunction subject to a maximum sum limit so that the defendant is not affected more than is justified by the size of the plaintiff’s claim. I prefer to follow that standard practice. I would give leave to the SFC to amend the draft order annexed to the Summons filed on 6 August 2025 in the manner as shown in red as per the revised draft Order annexed to the Summons save that Section A of the draft order shall contain the same terms as those set out in the draft provided by the SFC to the court on 27 March 2026.

70.The effect of the injunctions currently sought by the SFC is that only the assets of D2, D4, D5, D9, D11 and D14 as identified in the revised proposed order are subject to the injunction up to the maximum sum of HK$394,067,589. In my view, such injunctions do have utility as the individual’s assets are identified, which may be used to compensate the Innocent Market Investors should the SFC succeed in its s.213 claim against the relevant defendants.

71.I also accept the SFC’s submission that RNs and interim injunctions under s.213 of the SFO serve different purposes. In particular, the RNs are not supposed to be kept in place until trial, whenever that may be. The interim s.213 injunctions would have the additional utility of replacing the relevant RNs.

B6.  Consideration of Equitable Principles

72.Finally, I turn to the consideration of some of the equitable principles governing the grant of interlocutory freezing injunctions, which, in the words of Kwan J in SFC v A (above), would provide the court with “a sound basis of preliminary assessment”. In the present case, I consider that it is appropriate to consider the balance of convenience.

73.In the above sections, I have considered the factors which would make balance tilt in favour of granting a s.213 injunction against each of D2, D4, D5, D9, D11 and D14.

74.There are two factors that are relied upon against the grant of such injunctions.

75.First, the SFC pointed out that a regulator like itself bringing proceedings to enforce the law for the public benefit will not as a matter of course be required to provide a cross-undertaking as to damages, relying on S Gee QC Commercial Injunctions (7^th ed, 2022) §11-022 & 11-023 and SFC v A (above) at [54]-[59]. It submitted that the present s.213 claim is brought in its role as law enforcer to enforce its regulatory objectives, and that to require the SFC to provide a cross-undertaking would risk inhibiting its enforcement of the SFO by the fear of cross-claims and exposing financially the resources allocated by the Government for its functions. I note that none of the defendant asked the court to order the SFC to provide a cross-undertaking as to damages. Rather some of the defendants appeared to accept that the standard practice is not to require the SFC to offer a cross-undertaking as to damages, and instead submitted that the court take this into account in refusing an injunction against each of them. In my view, I agree with the SFC that the present proceedings are instituted in its capacity as a protector of the public investors. In the circumstances of the present case, I am not persuaded that I should exercise my discretion against the grant of the various injunctions sought just because the SFC is not ordinarily required to provide an undertaking as to damages.

76.Second, D2, D4, D5, D9, D11 and D14 submitted that there has been a significant lapse of time between the events in question and the present application, and that this factor should weigh against the granting of the injunctions. I note that around 3 years have elapsed between the time when the SFC first issued its direction to investigate (September 2022) and the date of the Summon (August 2025). The SFC pointed to the fact that it needed time to review huge volume of materials for the purpose of its investigation and to understand the complexity of the relationship amongst the members of the Syndicate. Despite such a long lapse of time, it is my view that there is utility in granting the injunction against each of D2, D4, D5, D9, D11 and D14 (as mentioned in Section B5 above). Further, “the significance of delay in each case must be considered on its own circumstances”: Convoy Collateral (above) at [79]. In the particular circumstances of this case, I do not consider that I should refuse the grant of the injunctions because of the lapse of time (or delay).

B7.  Conclusion

77.Having taken the above considerations into account, I would exercise my discretion to grant an injunction against each of D2, D4, D5, D9, D11 and D14 under s.213 of the SFO.

78.In the light of this conclusion, it is unnecessary for me to proceed to consider the SFC’s application for a Mareva injunction against each of D2, D4, D5, D9, D11 and D14.

C.  APPLICATION FOR DISCLOSURE ORDERS

79.In addition to the injunctions, the SFC also sought against each of D2, D4, D5, D9, D11 and D14 an ancillary disclosure order of all their assets in Hong Kong with an individual value of HK$50,000 or more. The application was opposed by all of the defendants. In particular, some defendants submitted that the scope of the injunction has been confined to the particular assets as identified in the revised proposed order, and that it would be unnecessary for them to disclose their other assets.

80.It is clear that an ancillary order may be under s.213(2)(g) of the SFO which “the Court of First Instance considers necessary in consequence of the making of any of the orders referred to in [s.213(2)(a) to s.213(2)(f)]”.

81.The SFC submitted that the ancillary disclosure orders are necessary to (1) ensure the effectiveness of the injunction by encouraging compliance for fear of contempt proceedings, and (2) enable the SFC to identify whether there are other assets which should be made the subject of an application for injunctive relief. I disagree.

(1)  As stated in S Gee QC Commercial Injunctions (7^th ed, 2022) §23-006:

“The disclosure order will reveal and evidence the existence of assets, and therefore encourage compliance with the injunction for fear of contempt proceedings. It is essential in enabling policing of the injunction. It enables the claimant to consider whether further steps should be taken to preserve or safeguard the assets which are within the scope of the injunction, and whether there are other assets which should be made the subject of an application for freezing relief, whether in England or abroad, or brought specifically within the terms of the existing relief, for example, assets recently acquired or receivables.”

(2)  Accordingly, a disclosure order will enable a plaintiff to police the injunction and to enable the plaintiff to consider what further steps should be taken to preserve the assets which are within the scope of the injunction.

(3)  However, when the injunctions in question are already confined to specific assets (similar to those which are sought by the SFC in the present application), the plaintiff can police the injunctions without any disclosure order.

(4)  In my view, given that the injunctions sought by the SFC are confined to the specific assets of the relevant defendants, I do not consider that the disclosure orders sought are necessary in consequence of the making of the injunctions. Such disclosure orders are not in my view ancillary to the injunctions because they seek disclosure of the defendants’ assets which are outside the scope of the injunctions.

82.For these reasons, I decline to exercise my discretion to grant the disclosure orders sought.

D.  DISPOSITION

83.To conclude, I grant an injunction against each of D2, D4, D5, D9, D11 and D14 under s.213 of the SFO, but decline to grant the disclosure order against them.

84.I give leave to the SFC to amend the draft order annexed to the Summons filed on 6 August 2025 in the manner as shown in red as per the revised draft Order annexed to the Summons, save that Section A of the draft order shall contain the same terms as those set out in the draft provided by the SFC to the court on 27 March 2026 (“Revised Proposed Order”).

85.Further, I make no order as those set out in Section B of the Revised Proposed Order. Save as aforesaid, I make an order in terms of the Revised Proposed Order.

86.I also make an order nisi that the costs of the Summons and the Amendment Summons as against each of D2, D4, D5, D9, D11 and D14 are to be in the cause.

Mr John Scott SC and Mr Roger Phang, instructed by Securities and Futures Commission, for the Plaintiff

Mr Francis Chung, instructed by Kim & Company, for the 2^nd and 4^th Defendants

Mr Sik Chee Ching, instructed by W.Y. Ku & Co., for the 5^th Defendant

Mr Esmond Wong, instructed by Ho, Tse, Wai & Partners, for the 9^th and 11^th Defendants

Mr Ian Yu, instructed by H.M. Tsang & Co., for the 14^th Defendant