Kennedy Wong loses suit to get back lost investment
Solicitor Kennedy Wong Ying-ho has lost on a technicality a lawsuit to recover his family's US$2 million stake in an investment fund that went bankrupt 13 years ago.
Mr Wong invested the sum in July 1991 as seed capital, via a family investment vehicle, Wycombe Investment, in an investment fund set up by his friend, Edwin Leong Siu-hung, the youngest son of late businessman Henry Leong.
The fund was formed to specialise in highly leveraged currency trading. The Court of First Instance heard that it lost more than US$8.4 million in January 1992 on short positions in the US dollar - consuming the fund's entire capital.
Wycombe Investment sued Mr Leong for US$2 million, plus interest.
Delivering his judgment, Justice William Stone said: 'Edwin Leong is not the correct defendant, and no action lies against Mr Leong personally.'
He said Mr Wong should have filed suit against Tai Hung Fai, an investment company controlled by Edwin Leong.
However, the judge added: 'If and in so far as Mr Leong personally had been the correct defendant he would have been liable to the plaintiff for breach of the standard of care [as a fund manager].
'Mr Leong placed the very existence of this fund on the line, and continued to do so in terms of the bets he had placed and retained in the face of the adverse market movement in the US dollar ... and it is this fact that underpins the conclusion of this court that there was a breach of the applicable minimum standard of care ... the law places upon a fund manager in his situation in this type of market.'
The Wong family accused Mr Leong of failing to manage the fund's investments prudently, taking on excessive leverage in foreign exchange trades and failing to put in place a risk management system to stop losses.
Justice Stone also described the highly publicised lawsuit between scions of two affluent Hong Kong families as 'an action which brings into dispute two erstwhile friends, wherein one is charged with responsibility for losing the other's money'.
He added: 'Perhaps unsurprisingly, this friendship, like the money, no longer exists.'
Besides the Wong family, billionaire property tycoon Thomas Kwok Ping-kwong, the vice-chairman and managing director of Sun Hung Kai Properties, and another wealthy property investor, Henry Fong Yun-wah, were the other two founding investors. Mr Kwok invested US$1.77 million and Mr Fong US$500,000. Neither was a party to the lawsuit filed by Mr Wong, a local delegate to the Chinese People's Political Consultative Conference.