The collapse of the Ming Fung Group yesterday became the largest failure of a brokerage in the 12-year history of the unified exchange, with compensation claims already hitting $349 million. The brokerage's failure is the latest financial scandal to plague Hong Kong since the regional economic crisis began last year, undermining investor confidence in the domestic market. CA Pacific group collapsed in January and faces compensation claims of about $300 million from 6,000 investors. Forluxe Securities went under earlier this month with as yet unspecified debts. Ming Fung Group's majority shareholder and managing director Chan Kwong-hung, 61, was released by the police yesterday on bail of $4 million in cash and third-party surety. He was detained by the police on Saturday in connection with an alleged theft. It is alleged Chan suffered huge losses after futures trading on his own account, then allegedly used his clients' funds to cover his loss-making positions, drawing up false documents to authorise the fund transfers. The Commercial Crime Bureau (CCB) said yesterday there was a shortfall of about $200 million at four of the group's branches. The Securities and Futures Commission said it had received 1,324 compensation claims involving about $349 million. In response, the commission put out restriction notices on the Ming Fung Groups' member firms - Chark Fung Securities, Winton Commence and Ming Fung Bullion - banning them from conducting further business. The SFC also plans to apply to wind the companies up to preserve their assets for potential creditors. The membership of Chark Fung Securities was suspended by the stock exchange and Winton Commence's membership was suspended by the futures exchange. Hongkong Clearing assistant director Betty Chan Shiu-fong said Chark Fung had been declared a defaulter by the clearing house. The clearing house would sell shares allocated to the firm to settle its unpaid positions. The latest collapse has further angered a broking community concerned it is going to be left paying the bill by contributing more to any compensation fund. In January, the Government announced it wanted to enlarge the existing compensation fund to more than $1 billion, to help investors hit by the collapse of CA Pacific. Under the plan, the SFC and the stock exchange will each inject up to $300 million into the $480 million fund, lifting the total to $1.08 billion. Secretary for Financial Services Rafael Hui Si-yan said yesterday details of the CA Pacific compensation package would be announced next month and indicated efforts for Forluxe Securities and Chark Fung Securities could follow the same model. 'The $1 billion compensation fund is set at such a high level, as we predicted some individual brokers may be hit by the economic downturn and market turmoil. 'The Government will lend additional money to the fund if necessary.' Chim Pui-chung - who was yesterday elected the first legislative councillor representing for the Financial Services sector - said: 'It is unfair for other brokers to have to compensate the clients of failed brokers.' Bank of China Group Securities deputy chairman Fung Chi-kin, said he would lead a public protest if brokers were asked to contribute to the compensation package.