Chen Si Ying Cynthia v. Securities and Futures Commission and Another

CAMP 133/2025

[2026] HKCA 1151

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 133 OF 2025

(ON AN INTENDED APPEAL PURSUANT TO SECTION 266 OF THE SECURITIES AND FUTURES ORDINANCE, CAP 571 FROM DETERMINATIONS OF THE MARKET MISCONDUCT TRIBUNAL)

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J U D G M E N T

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Hon Harris J (giving the Judgment of the Court):

Introduction

1.There are two summonses before this Court:

(1)  By the Summons dated 17 July 2025 (“1^st Summons”), the Applicant (a) seeks leave to appeal to the Court of Appeal against the determinations of the Market Misconduct Tribunal (“Tribunal”) made in Part II of the Report dated 5 June 2025 (“Part II Report”); (b) applies for stay of execution of the orders made by the Tribunal (“Orders”) in Part III of the Report dated 2 July 2025 (“Part III Report”); and (c) applies for time extension for the filing and service of Notice of Appeal in respect of the Grounds of Appeal (on the points of law) until 7 days after the determination of the application at (a) above.

(2)  By the Summons dated 4 August 2025 (“2^nd Summons”), the Applicant seeks (a) retrospective leave to file the 1^st Summons for leave to appeal on questions of fact against the determinations in the Part II Report and the Orders out of time; and (b) leave to amend the Draft Notice of Appeal (with the Amended Draft Notice of Appeal annexed to the 2^nd Summons).

2.Having considered the papers, we are of the view that it would be appropriate to dispose of the applications on paper.

Background

3.By a Notice made pursuant to section 252(2) of and Schedule 9 to the Securities and Futures Ordinance (Cap. 571) (“Ordinance”) dated 29 February 2024, the 1^st Respondent (“Commission”) instituted the Inquiry before the Tribunal in respect of the dealings of the listed securities of Asiasec Properties Limited (formerly known as Dan Form Holdings Company Limited (Stock Code: 271) (“Dan Form”)). The Applicant was the 1^st Specified Person in the Inquiry.

4.The Commission’s case against the Applicant was set out in the Notice and was summarised at [51]-[67] of the Part II Report. It suffices to highlight the following for the present purpose.

5.The Applicant was the company secretary and secretary to the board of directors of Dan Form. Mr Wen Lide (“Mr Wen”) was a relative of the Applicant. Mr Dai Xiaoming (“Mr Dai”) was the chairman of the board of directors, the chief executive and an executive director of Dan Form and its controlling shareholder, holding a beneficial interest in 36.45% of its issued share capital (“Sale Shares”).

6.On 24 June 2016, an announcement was made by Dan Form that trading of its shares would be halted pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers (“Takeovers Code”). On 28 June 2016, Dan Form announced a potential acquisition of the Sale Shares and trading in Dan Form shares resumed. Negotiations of the acquisition were eventually terminated by Mr Dai on 18 August 2016, an announcement in respect of which was made on 19 August 2016.

7.On 22 September 2016, in a Joint Announcement, Dan Form, Tian An, and Autobest (a wholly-owned subsidiary of Tian An) announced that:

(1)  Autobest had conditionally agreed to acquire Mr Dai’s Sale Shares at HK$2.75 per share; and

(2)  Yu Ming Investment Management Limited would, on behalf of Autobest, make a conditional mandatory cash offer for all the remaining issued shares of Dan Form at HK$2.75 per share (“Offer Price”).

8.The Notice set out the communications between Mr Brian Liu Wui Hang (“Mr Brian Liu”) and Mr Kin Chan of Argyle Street Management Limited (“ASM”) on the one hand and Mr Dai and the Applicant on the other hand, commencing with an email from Mr Kin Chan dated 4 August 2016, to Mr Dai and the Applicant, in which Mr Kin Chan had expressed interest on behalf of ASM in acquiring the Sale Shares. Those communications continued in the weeks that followed.

9.On 7 August 2016, the Applicant was present at the meeting among Mr Dai, Mr Kin Chan and Mr Brian Liu at which the potential acquisition of Mr Dai’s Sale Shares was discussed.

10.By an email dated 23 August 2016, Mr Kin Chan informed the Applicant that ASM was keen to discuss the possibility of buying Mr Dai’s Sale Shares. During the period following, up and until 8 September 2016, there were further communications of negotiations between the parties including the Applicant. After the market had closed on 19 September 2016, Autobest executed a Sale and Purchase Agreement. On 20 September 2016, trading in the shares of Dan Form was suspended, pending the release of an announcement to be made under the Takeovers Code.

11.Following the Joint Announcement on 22 September 2016, on 23 September 2016, trading in Dan Form shares resumed, closing at HK$2.66 per share. That was 11.3% higher than the closing price of HK$2.39 on the previous day of trading on 19 September 2016.

12.Between 24 August 2016 and 19 September 2016, Mr Wen acquired Dan Form shares through his securities accounts, Shenwen Account and Grant Account, and also through the securities accounts of Mr Wen’s wife, the Li’s Account.

13.During the period from 29 September 2016 to 26 October 2016, Mr Wen disposed of a total of 3,370,000 Dan Form shares accumulated between 24 August 2016 and 19 September 2016, through the Shenwen Account and Grant Account. On 29 September 2016, Mr Wen disposed of all 100,000 Dan Form shares kept in the Li’s Account.

14.In relation to the payments made into Mr Wen’s Shenwen Account, out of the total of HK$4,146,000 deposited into the Shenwen Account between 4 July and 12 September 2016 (to settle various purchases of Dan Form shares), HK$3,652,242 was paid into the Shenwen Account by cheques that were drawn on Mr Wen’s account at HSBC during the period from 28 July 2016 to 12 September 2016. The Applicant and/or her husband Mr Winson Chim (“Mr Chim”) wrote the payees’ names and the amounts on these cheques and deposited them into the Shenwen Account. In addition, on 24 August 2016, the Applicant paid a sum of HK$49,541 into the Shenwen Account.

15.Of the disposal of the net proceeds of the sale of shares in Mr Wen’s Shenwen Account, about 47.49% of the net proceeds from Mr Wen’s disposal of his holdings in Dan Form shares, that had been accumulated through the Shenwen Account between 24 August 2016 and 19 September 2016 were eventually given to the Applicant. During the period from 21 November 2016 to 28 February 2017, a total of HK$3,223,786.46 were transferred to an account held in the Applicant’s sole name.

16.By reason of the aforesaid, it is the Commission’s case that, the Applicant, being connected with Dan Form, having information which she knew was inside information in relation to Dan Form, counselled or procured Mr Wen to acquire Dan Form shares, knowing or having reasonable cause to believe that he would deal in Dan Form shares, and/or disclosed the inside information to Mr Wen, knowing or having reasonable cause to believe that he would make use of the inside information for the purpose of dealing in Dan Form shares.

17.In the Part II Report, the Tribunal determined inter alia that the Applicant had engaged in insider dealing in relation to the listed securities of Dan Form under section 270 of the Ordinance. In particular, the Tribunal was satisfied that:

(1)  The Applicant knew that the prospects of a successful conclusion to the negotiations had increased very significantly in the short period after Mr Brian Liu and Mr Kin Chan had renewed contact with her on the subject of acquiring Mr Dai’s controlling stake of Dan Form. It was the Applicant’s knowledge of the significant increase in the prospects of a successful conclusion to the negotiations that was directly connected to the flurry of activity of trading in Dan Form shares in Mr Wen’s Shenwen Account commencing on 24 August 2016 and continuing thereafter[1].

(2)  Given that Mr Wen’s Shenwen Account was operated by his direct oral instructions, clearly it was necessary that the Applicant communicated to Mr Wen her opinion, and the basis of her forming that opinion, of the increasingly promising negotiations, between ASM and Mr Dai in respect of his holding of Dan Form shares, in order to secure Mr Wen’s cooperation and participation in trading in Dan Form shares in Mr Wen’s Shenwen Account. The Tribunal was satisfied that she did communicate that information directly or indirectly through Mr Chim to Mr Wen on or before 24 August 2016 and continued thereafter to provide him with information directly or indirectly through Mr Chim of the developments in the negotiations[2].

(3)  The information about the agreement of the Offer Price reached by Mr Dai and Mr Brian Liu on 2 September 2016, was information that if known to those who traded in or were likely to trade in Dan Form shares, would likely materially affect the price of those shares. This was known to the Applicant. In reaching the determination, the Tribunal was satisfied that the analysis by the Commission’s market expert, Mr Leung Yiu Man (“Mr Leung”) in respect of the 8 September 2016 information was apposite and applicable to the information on 2 September 2016[3].

(4)  The terms agreed on 2 September 2016, notwithstanding the outstanding details that were yet to be agreed, were such that it was then a commercially realistic prospect that the transaction would occur. The Tribunal was satisfied that the Applicant knew that and that she provided her opinion, and the factual basis for forming it, to Mr Wen in order to secure his continued cooperation and participation in the trading in Dan Form shares in his Shenwen Account. It is to be noted that the closing price of Dan Form shares on 2 September 2016 was HK$1.72 per share. There was a significant opportunity to make profit on trading in Dan Form shares.[4]

18.By the Part III Report, the Tribunal made the Orders against the Applicant which were registered in the Court of First Instance in the action HCMP 1100/2025 on 4 July 2025. The Orders include inter alia that:

(1)  The Applicant shall not, without the leave of the Court of First Instance, be a manager of Asiasec Properties Limited or any other listed corporation or in any way, whether directly or indirectly, be concerned or take part in the management of a listed corporation for a period of 4 years.

(2)  The Applicant and Mr Wen shall not, without the leave of the Court of First Instance, directly or indirectly in any way acquire, dispose of or otherwise deal in any securities for a period of 4 years.

(3)  The Applicant and Mr Wen shall jointly and severally pay the Government HK$794,347.44 with compound interest from 26 October 2016 until payment.

(4)  The Applicant and Mr Wen shall jointly and severally pay the costs and expenses reasonably incurred by the Government and the Commission in relation or incidental to the Inquiry.

(5)  It is recommended to the Hong Kong Chartered Governance Institute that it takes disciplinary action against the Applicant as one of its members.

The Applicant’s intended appeal

19.On 17 July 2025, the Applicant filed the 1^st Summons to seek leave to appeal against the determinations by the Tribunal in the Part II Report, with the Draft Notice of Appeal annexed.

20.On 4 August 2025, the Applicant filed the 2^nd Summons to seek leave to amend the Draft Notice of Appeal in the form of the Amended Draft Notice of Appeal annexed to the 2^nd Summons.

21.In the Amended Draft Notice of Appeal, the Applicant has advanced 5 grounds of appeal which may be summarised as follows.

(1)  Ground 1: The Tribunal erred in fact and in law in depriving the Applicant of a fair hearing in respect of the Tribunal’s reliance on the new points in making the findings against the Applicant, that she had informed Mr Wen of the ongoing negotiations surrounding the sale of Mr Dai’s shares on or before 24 August 2016 and which continued thereafter.

(2)  Ground 2: The Tribunal erred in fact and in law in finding that the information that the agreement of the Offer Price reached between Mr Dai and Mr Brian Liu on 2 September 2016 and was inside information.

(3)  Ground 3: The Tribunal erred in fact and in law in finding that the Applicant communicated the information pertaining to the negotiations between Mr Dai and ASM through Mr Chim to Mr Wen on or before 24 August 2016 and after.

(4)  Ground 4: The Tribunal erred in law by depriving the Applicant of a fair hearing in relation to new evidence put before the market expert in the course of the Inquiry.

(5)  Ground 5: The Tribunal erred in law by depriving the Applicant of a fair trial by proceeding on a new case in the Part II Report.

Legal principles

22.Under section 266 of the Ordinance, a person identified as having engaged in market misconduct who is dissatisfied with a finding or determination of the Tribunal may appeal to the Court of Appeal against the finding or determination on a point of law or, with the leave of the Court of Appeal, on a question of fact.

23.In order for leave to be granted the proposed appeal must be one which has “a reasonable prospect of success”, i.e. prospects of success that are reasonable and therefore more than fanciful, without having to be probable (Chui Tak Keung Duncan v Market Misconduct Tribunal[5]).

24.The principles governing an appeal to challenge factual findings are well established. The appeal court does not assume the task of reviewing the evidence and substituting its finding in place of the trial judge unless the finding of fact by the trial judge is plainly wrong, even if the appeal court may entertain some doubts as to its correctness. The appeal court cannot be expected to re-assess the weight to be attached to the evidence of a witness when the point had not been properly canvassed below. The applicable principles must be firmly borne in mind in the case of a specialist tribunal, chaired by a judge with two members drawn from the financial industry. Members of the Tribunal have a unique advantage in understanding the market participants and their behaviour (Securities and Futures Commission v Yiu Hoi Ying Charles[6]).

25.It is trite that the nature of the inquiry on market misconduct is civil and inquisitorial. It is not the Tribunal’s function to adjudicate between rival claims but to inquire into a question of market misconduct. The Commission is only required to present evidence to the Tribunal to enable the Tribunal to form a decision on the matter (Securities and Futures Commission v Cheng Chak Ngok[7]).

Leave application

26.Before we turn to the merits of the leave application, we note that the Commission, in opposing the leave application, did not take issue with the Applicant having filed the 1^st Summons on 17 July 2025 and the Applicant’s reliance on the Amended Draft Notice of Appeal annexed to the 2^nd Summons. On this basis, we shall determine this application taking into account the appeal grounds set out in the Amended Draft Notice of Appeal.

27.There is no dispute that Grounds 1 to 3 in the Amended Draft Notice of Appeal are question of facts for which leave is required. We are of the view that none of the proposed grounds has a reasonable prospect of success.

28.In relation to Ground 1, the Applicant contends that the Tribunal erred in relying on two “new points” in making the findings against the Applicant, that she had informed Mr Wen of the ongoing negotiations surrounding the sale of Mr Dai’s shares on or before 24 August 2016 and which continued thereafter. The first new point is that the Applicant was informed of the termination of negotiations in respect of the potential acquisition on 18 August 2016, and this has not been put to the Applicant during the Inquiry.

29.However, the Applicant’s contention is misconceived. It is not the Tribunal’s finding that the Applicant was informed of the termination on 18 August 2016. At [615] of the Part II Report, the Tribunal found that, Dan Form made an Announcement in the name of the Applicant on 19 August 2016 that it (i.e. Dan Form) had been informed by Mr Dai that the negotiation of the possible acquisition of his shares had been terminated. The Tribunal’s finding is based on the Announcement dated 19 August 2016. Hence, there is no basis to suggest that the Tribunal made its determination by reference to evidence not explored during the Inquiry.

30.Further, the Applicant also suggests that, in analysing the Applicant’s connection with Mr Wen’s funding arrangements from the Mainland China to his HSBC account in Hong Kong on 23 August 2016 before his purchase of Dan Form shares on 24 August 2016, the Tribunal at [618]-[623] of the Part II Report referred to irrelevant matters as between Ms Wu Ka Yu (“Ms Wu”) and a “Chen Hong” and in particular Ms Wu’s receipt of a bank receipt from “Chen Hong” provided as part of Ms Wu’s reply to a section 183 notice to the Commission dated 15 January 2020.

31.The Applicant’s contention is not arguable. It is not disputed that Ms Wu’s reply formed part of the evidence in the course of the Inquiry. Mr Wu’s reply is clearly relevant to the funding arrangements prior to the trading in Dan Form shares in Mr Wen’s Shenwen Account. The Tribunal was entitled to consider all available evidence to make its determination. The Applicant was not deprived of a fair hearing as she could have adduced evidence and made submissions in response to Ms Wu’s reply during the Inquiry.

32.In Ground 2, the Applicant complains that in determining the information that the agreement of the Offer Price reached between Mr Dai and Mr Brian Liu on 2 September 2016 was inside information, the Tribunal erroneously relied on an email between Mr Brian Liu and Mr Kin Chan dated 3 September 2016 (“3 September Email”)[8] in which Mr Brian Liu recorded the agreement.

33.The Applicant’s contention is not arguable. The essence of the Applicant’s complaint hinges on the weight attributed to a piece of evidence when the Tribunal made its determination. In rejecting the Applicant’s evidence that the meeting on 2 September 2016 ended unhappily, the Tribunal noted that such assertion was not suggested to Mr Dai or Mr Brian Liu in their cross-examination[9]. The Applicant having failed to challenge the accuracy of the contents of the 3 September Email, it is not for the appeal court to re-assess the weight attached to the evidence. The Tribunal is better placed to evaluate the evidence adduced before it during the Inquiry.

34.Further, the Applicant contends that, when analysing Mr Leung’s assessment of whether the 2 September 2016 information was inside information, the Tribunal has failed to take into account the fact that ASM was not a party to the ultimate acquisition of Mr Dai’s shares and has failed to consider what the Applicant suggests are wrong assumptions made by Mr Leung in his expert evidence. We disagree.

35.It is clear from the Part II Report[10] that the Tribunal understood ASM’s role in the transaction when analysing the relevant evidence adduced during the Inquiry. There is no basis to suggest that the Tribunal has failed to take it into account in its assessment of the evidence.

36.Moreover, it is erroneous to suggest that the Tribunal should not have relied on Mr Leung’s analysis on the ground that such analysis was based on his wrong factual assumptions. Findings of fact arising from the evidence is a matter for the Tribunal, not an expert witness. In our view, the Tribunal properly considered Mr Leung’s evidence taking into account the Tribunal’s factual findings, before it came to the conclusion that his analysis in respect of the 8 September information is apposite and applicable to the 2 September 2016 information[11].

37.In respect of Ground 3, the Applicant contends that the Tribunal made a finding at [645] that she had communicated the inside information to Mr Wen directly or indirectly via Mr Chim with no factual basis and erred in its analysis of the connection with Mr Wen’s funding. We disagree.

38.The Tribunal has made the findings based on the available evidence including (a) the detailed analysis of the fund flow between the Applicant and Mr Wen[12] and (b) the timing of trading in Dan Form shares in Mr Wen’s Shenwen Account commencing on 24 August 2016 and continuing thereafter[13]. The Tribunal is entitled to make inferences from the available evidence and there is no basis to suggest that the Tribunal’s determination is plainly wrong.

39.In our view, none of Grounds 1 to 3 has a reasonable prospect of success. Nor is there any other reason in the interests of justice why the appeal should be heard. Notwithstanding the refusal of leave to pursue Grounds 1 to 3, it remains open to the Applicant to pursue her appeal in relation to Grounds 4 and 5 which are questions of law.

Stay application

40.The Applicant in her affirmation advances the following reasons in support of her stay application:

(1)  The Applicant’s appeal has a strong likelihood of success.

(2)  The Applicant would suffer irreversible hardship if the disgorgement and costs orders were not stayed, because the orders imposed on the Applicant would greatly impair her financial situation.

(3)  If no stay were granted, it would also cause irreversible damage to the Applicant’s professional reputation and completely destroy her professional career.

41.The Commission’s position is that no stay should be granted in favour of the Applicant on the following grounds.

(1)  The Applicant’s appeal has no merits.

(2)  The Applicant has not adduced evidence to demonstrate that she is unable to pay for the financial penalties.

(3)  It is in the public interest that appropriate sanctions be taken against the Applicant without delay.

42.The principles governing an application for a stay of execution pending appeal are well-established and explained in Star Play Development Ltd v Bess Fashion Management Co Ltd[14]:

(1)  An appeal does not operate as a stay of execution (Order 59 rule 13(1) of the Rules of the High Court (Cap. 4A)).

(2)  The burden is on an appellant to justify a claim for a stay, and demonstrate that good reasons exist for a stay pending appeal. If the appeal is strong, that may itself be enough for a stay to be granted. However, if the appeal is only arguable, the appellant would need to provide the court with additional reasons to justify a stay, e.g. that the appeal would be rendered nugatory if a stay were not granted.

(3)  In assessing the strength of the appeal for the purpose of a stay application, it is impracticable and undesirable to go deeply into the merits. A broad-brush approach is required.

43.We have already explained why in our view none of Grounds 1 to 3 has a reasonable prospect of success. In relation to Grounds 4 and 5, the Applicant contends that she was deprived of a fair hearing when the Tribunal (1) allowed new evidence to be put before the market expert and (2) proceeded to assess the subject matter of the Inquiry on a different basis to that contained in the Commission’s Synopsis. While we do not find it necessary or appropriate to be drawn into an assessment of the merits (or otherwise) of Grounds 4 and 5, we take the view that, given the inquisitorial nature of the Inquiry and the Commission’s role in presenting evidence to the Inquiry, the merits of Grounds 4 and 5 are plainly not so strong as of themselves to justify the grant of a stay. This being the case it is necessary for the Applicant to show additional good reasons to justify a stay. In our view, she has not done so.

44.First, we do not accept the Applicant’s submissions that the disgorgement and costs orders imposed on her would greatly prejudice her financial situation. The Applicant has not adduced sufficient evidence of her current financial conditions to support this submission.

45.Second, we do not accept the Applicant’s argument that it would cause irreversible damage to her reputation and professional career if no stay were granted. The Applicant has not adduced any evidence in relation to any disciplinary proceedings against her including her prospects of obtaining a stay of the disciplinary proceedings pending the determination of her appeal. There is nothing to suggest that she will be unable to secure another job pending the appeal or to return to her desired profession should her appeal eventually succeed.

46.In the circumstances, we refuse to grant a stay of execution of the Orders made in the Part III Report.

Disposition and costs

47.For the foregoing reasons, we make the following orders:

(1)  The Applicant’s application for leave to appeal to the Court of Appeal in respect of Grounds 1 to 3 in the Amended Draft Notice of Appeal be dismissed.

(2)  The Applicant is at liberty to file and serve the Notice of Appeal in respect of Grounds 4 and 5 in the Amended Draft Notice of Appeal within 7 days from the Order.

(3)  The Applicant’s application for stay of execution of the Orders in the Part III Report be dismissed.

48.As to costs, there shall be an order nisi that (1) the Applicant do pay the Commission the costs of the applications; and (2) for the purpose of a summary assessment, the Applicant do within 14 days lodge a statement of objections (if any) to the Commission’s Revised Statement of Costs dated 18 September 2025.

49.As this application for leave to appeal is totally without merit, pursuant to Order 59, rule 2A(8) of the Rules of the High Court of High Court (“RHC”), we further order that no party may request an oral hearing for reconsideration under Order 59, rule 2A(7) of the RHC.

Written submissions by Ms Tania Tse, instructed by Li & Lai Solicitors LLP, for the Applicant

Written submissions by Mr SW Lee and Mr Charlie Liu, for the 1^st Respondent

Market Misconduct Tribunal, the 2^nd Respondent, unrepresented and absent