Stock Connect trader investigated by regulators seeks judicial review
Tang Hanbo, the first Chinese trader to be penalised by regulators for breaching securities regulations involving Hong Kong stocks, is seeking a judicial review in the city to revoke and invalidate a search conducted on his residence, claiming the gathering of evidence was unlawful.
Tang, a Chinese citizen living in Hong Kong, was slapped with 1.2 billion yuan (US$174 million) in fines and penalties by the China Securities Regulatory Commission for breaching the country’s securities rules in the share dealings of Heng Xin China Holdings and Tian Ge Interactive Holdings during August 2015 and June 2016.
The breaches, in part, involved the Hong Kong-Shanghai Stock Connect programme, which allows Chinese citizens to trade in Hong Kong-listed stocks. Tang had opened up trading accounts on the mainland and with Yue Xiu Securities in Hong Kong.
In Hong Kong, the Securities & Futures Commission had applied for a search warrant at the Eastern Magistracy to seize materials at Tang’s Shatin residence to help investigations that also involved the share dealings of the two companies.
But the warrant did not specify if it was to seize evidence to help with the CSRC’s investigation, argued Tang’s law firm CL Chow & Macksion Chan.
Consequently, SFC’s execution of the search warrant and the transmission of the materials seized, including information from Tang’s computers, to the CSRC was also unlawful, the firm claimed.
Judge Hon Anthony Chan said he will decide whether to set a date to adjourn the discussion, or grant leave to settle the case by private law action instead. The date for the decision was not announced.
Tang is seeking a judiciary review rather than private law action because the complaint is on the actual authority of whether the warrant is lawful, which is seen as a public matter. The search warrant ought to have included that the seized materials were to assist in the CSRC investigations, which may lead to criminal proceedings.
But Judge Chan said a judicial review should only be used as a remedy of last resort, and may grant leave for private law action.