Web of lawsuits involving Hong Kong finance firm Convoy to be heard in court together in March

Three separate legal cases involving troubled financial firm Convoy Global Holdings will be heard together on March 6, a Hong Kong High Court judge ruled on Friday.

Mr Justice Jonathan Harris ruled that a case brought by a small shareholder, Zhu Xiaoyan, should be combined with two others – one initiated by Convoy’s new management and another by its second-largest shareholder, Kwok Hui-kwan – because they are all related.

The lawsuits stem from an anti-corruption investigation into Convoy, one of the city’s biggest financial advisory firms with some 100,000 customers, including the pension scheme, the Mandatory Provident Fund (MPF).

Its former chairman Quincy Wong Lee-man, former vice-chairman Rosetta Fong Sut-sum, and former director Christie Chan Lai-yee have all been arrested over the investigation, which is being conducted jointly by the Securities and Futures Commission and the Independent Commission Against Corruption and is Hong Kong’s largest ever securities and anti-corruption investigation.

Convoy sues ex-directors for stealing from financial adviser’s US$520m stock placement

The hearing on Friday was over Zhu’s claims against 32 defendants, including former chairman Wong and second-largest shareholder Kwok. Zhu is seeking compensation for what she said was an around HK$2 million (US$255,811) loss on her investment in Convoy and is also asking that Kwok’s shareholdings be invalidated.

Zhu’s petition said she had suffered losses as a result of the investigation, which she said had been triggered by a number of private placements by Convoy in 2015, worth a total of HK$4.043 billion.

The placements had resulted in the shares going to a network of companies related to a former Convoy executive director, Roy Cho Kwai-chee, who then sold the shares. Kwok bought them, making him Convoy’s second-largest shareholder, the petition said.

The SFC and ICAC have not released details of the case.

Kwok has already brought his own case against Convoy’s new chairman, Johnny Chen, who is supported by the company’s largest shareholder and Kwok’s rival for control, Taiwan’s Tsai family.

Kwok’s case is over Chen’s decision to invalidate Kwok’s shares at a shareholder meeting on December 29, a move that allowed Chen to overturn a motion brought by Kwok to remove eight directors backed by the Tsai family and appoint his own.

The judge asked why Zhu had included the invalidation of Kwok’s shares in her petition when Convoy had already taken such action. Zhu’s lawyer, in court on her behalf, replied that Zhu was worried the shareholder meeting on December 29 might have led to a change of management of the company, and so she took action herself.

Shareholder fires back at ‘rude’ chairman in boardroom battle at troubled Hong Kong firm Convoy

In the third case, Convoy’s new management is suing former chairman Wong and 27 other related parties, alleging theft of assets from the company’s private placements in 2015.