Hong Kong tribunal clears “Red Capitalist” scion of misleading the investing public
Larry Yung and four former directors of Citic Limited were cleared of charges of misconduct and of misleading the investing public over a 2008 foreign-exchange loss in his company.
Larry Yung Chi-kin, the son of the “Red Capitalist” founder of China’s largest conglomerate, has been cleared along with four former directors of Citic Ltd of charges of misconduct and of providing misleading information to the investing public over a 2008 foreign-exchange loss.
“There has been a failure to prove” the charges of culpability under the Securities & Futures Ordinance, which renders the issue of criminal responsibility unnecessary, according to a statement by the Market Misconduct Tribunal, citing a verdict handed down by Mr Justice Michael Hartmann.
The verdict is a set back for the Securities & Futures Commission, which has been investigating
since 2009 whether Yung and his fellow directors misled investors with an October 2008 profit warning. The SFC sued in September 2014 to seek compensation for HK$1.9 billion of trading losses for as many as 4,500 investors. The case for the compensation is still pending a hearing.
Known to the public as “Prince Yung,” the former chairman and his family are often the subject of media attention because of his wealth, his family background and his love of horse racing.
Yung’s father, the late Rong Yiren, was dubbed the “Red Capitalist” for his role in establishing the China International Trust & Investment Corp. (Citic), which became the first Chinese company allowed to raise foreign capital. Rong was China’s vice president from 1993 to 1998, and was listed as early as 2000 as one of Asia’s wealthiest men.
The company, at one stage China’s biggest conglomerate with businesses from telecommunications to real estate, had issued a warning in October 2008 about potential losses from foreign-exchange contracts. That warning caused Citic’s shares to plunge. Five weeks earlier, the company had issued a circular saying that there had been no adverse material change to its finances.
Yung was cited for investigation with Citic’s former deputy managing directors Leslie Chang Li-hsien and Peter Lee Chung-hing, former managing director Henry Fan Hung-ling, and former executive director Chau Chi-yin. All five were cleared of the charges of misleading the public.
Yung and Fan left the company in April 2009.