SECURITIES AND FUTURES COMMISSION v. CHEONG KAI TJIEH AUGUSTINE AND ANOTHER

HCA 2269/2012

[2018] HKCFI 437

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2269 OF 2012

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C O R R I G E N D U M (2)

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1.  After page 4, append the Order annexed hereto to the Decision.

Dated this 11^th day of June 2018.

Order

1. Out of the sum of HK$13,618,203.06 paid into Court by the 1^st Defendant pursuant to the Notice of Payment into Court dated 24 January 2013:-

(a) the sum of HK$2,321,816.86, together with interest in the sum of HK$176,585.30 calculated at 8% per annum accrued from 13 March 2017 up to and including 22 February 2018, totaling HK$2,498,402.16 (plus further interest at the rate of 8% per annum (i.e. a daily rate of HK$508.89) accruing from 23 February 2018 up to the date of payment out) be forthwith paid out from Court to The Government of the Hong Kong Special Administrative Region, in settlement of the 1^st Defendant’s liability under paragraph 5(a) of the Order made by the Market Misconduct Tribunal on 13 March 2017 (the “MMT Order”) as registered in HCMP 629 of 2017;

(b)  the sum of HK$103,357.19, together with interest in the sum of HK$7,860.81 calculated at 8% per annum accrued from 13 March 2017 up to and    including 22 February 2018, totaling HK$111,218 (plus further interest at the rate of 8% per annum (i.e. a daily rate of HK$22.65) accruing from 23 February 2018 up to the date of payment out) be forthwith paid out from Court to The Government of the Hong Kong Special Administrative Region, in settlement of the 2^nd Defendant’s liability under paragraph 7(a) of the MMT Order;

(c) the sum of HK$669,600, together with interest in the sum of HK$50,926.29 calculated at 8% per annum accrued from 13 March 2017 up to and including 22 February 2018, totaling HK$720,526.29 (plus further interest at the rate of 8% per annum (i.e. a daily rate of HK$146.76) accruing from 23 February 2018 up to the date of payment out) be forthwith paid out from Court to the Plaintiff, in settlement of the 1^st and 2^nd Defendants’ liability under paragraph 9(1) of the MMT Order;

(d) the sum of HK$392,307, together with interest in the sum of HK$29,836.83 calculated at 8% per annum accrued from 13 March 2017 up to and including 22 February 2018, totaling HK$422,143.83 (plus further interest at the rate of 8% per annum (i.e. a daily rate of HK$85.99) accruing from 23 February 2018 up to the date of payment out) be forthwith paid out from Court to the Plaintiff, in settlement of the 1^st and 2^nd Defendants’ liability under paragraph 9(2) of the MMT Order; and

(e)  the sum of HK$165,532.04, together with interest in the sum of HK$12,589.51 calculated at 8% per annum accrued from 13 March 2017 up to and including 22 February 2018, totaling HK$178,121.55 (plus further interest at the rate of 8% per annum (i.e. a daily rate of HK$36.28) accruing from 23 February 2018 up to the date of payment out) be forthwith paid out from Court to The Government of the Hong Kong Special Administrative Region, in settlement of the 1^st and 2^nd Defendants’ liability under paragraph 10 of the MMT Order

(collectively, the “Sums for Payment Out”).

2. Out of the remaining balance of HK$13,618,203.06 (i.e. HK$13,618,203.06 less the Sums for Payment Out):

(a) a sum of HK$150,000 be paid out of Court to the Administrator appointed pursuant to paragraph 3 below, being the remuneration of the Administrator (as referred to in paragraph 4 below); and

(b) pursuant to section 213(2)(b) of the Securities and Futures Ordinance (“SFO”), the remaining balance (i.e. HK$13,618,203.06 less the Sums for Payment Out less HK$150,000) (the “Funds”) be paid to the Administrator appointed pursuant to paragraph 3 below, for the purposes of providing financial compensation or restitution to those persons who entered into transactions with the 1^st Defendant and/or 2^nd Defendant as set out in paragraph 3(b) below.

3. Pursuant to section 213(2)(d) of the SFO, Mr Bruno Arboit of Zolfo Cooper (Hong Kong) Limited be appointed as Administrator for the following purposes, namely:

(a) to receive, hold and administer the Funds and for that purpose all necessary and proper directions may be given;

(b) to determine the amounts to be paid to each person or persons (together the “Counterparties” and each a “Counterparty”) who entered into transactions to purchase shares of Titan Petrochemicals Group Limited (“Titan”) from (i) the 1^st Defendant during the period from 3 to 5 January 2012 inclusive and/or (ii) the 2^nd Defendant on 3 January 2012:

(i) in respect of the Counterparties who are  holding  the  Titan  shares purchased from the 1^st Defendant or 2^nd Defendant and elect to transfer the  shares to the Administrator, each Counterparty  shall be paid a sum equal to the price at which those securities were purchased from the 1^st Defendant or 2^nd Defendant in the transaction(s), together with reimbursement of any transaction costs, fees or levies incurred by the Counterparty in (a) purchasing those shares from the 1^st Defendant or 2^nd Defendant and (b) transferring those shares to the Administrator;

(ii) in respect of the Counterparties who are holding the Titan shares and elect not to transfer the shares to the Administrator, each Counterparty shall be paid a sum representing the difference between the purchase price per share and HK$0.1956, multiplied by the number of Titan shares that were purchased by that Counterparty from the 1^st Defendant or 2^nd Defendant;

(iii) in respect of the Counterparties who had at any time disposed of the Titan shares purchased from the 1^st Defendant or 2^nd Defendant at a price lower than the price at which the Titan shares were purchased, each Counterparty shall be paid a sum representing the difference between the price per share at which the Titan shares were purchased from the 1^st Defendant or 2^nd Defendant and HK$0.1956, multiplied by the number of Titan shares that were purchased; and

to effect all and each of such payment(s) expeditiously.

4. The remuneration of the Administrator shall be fixed in the sum of HK$150,000, save that the Administrator may charge for all reasonable out-of-pocket costs and expenses properly incurred in receiving, holding and administering the Funds and any Titan shares received from Counterparties and in performing his duties pursuant to this Order.  The Administrator shall maintain records and accounts of all said out-of-pocket costs and expenses which, together with his remuneration, shall be paid in full unless the Court otherwise orders.

5. The Administrator shall have, inter alia, the following powers and duties in accordance with the orders and directions of the Court:

(a) to receive, administer and distribute the Funds for the purposes provided under this Order;

(b) to place the Funds, when received by the Administrator, and to maintain the same in a bank account or accounts opened in the name of the Administrator, such account(s) to be interest bearing pending distribution or payment contemplated under this Order;

(c) to ascertain the wishes of the Counterparties as to whether or not they wish to return Titan shares to the 1^st Defendant or 2^nd Defendant, to call on the Counterparties to lodge claims, by a given date, and to check and verify such claims of the Counterparties and for this purpose to make all necessary inquiries with relevant brokers and intermediaries as required;

(d) to receive into the possession, custody and control of the Administrator, the shares of Titan that were purchased from the 1^st Defendant and/or 2^nd Defendant from those Counterparties who elect to return shares, and all documents of title, certificates and other instruments relating to title concerning the shares of Titan;

(e) to open such securities account(s) in the name of the Administrator, for the purpose of receiving or holding the securities of Titan received from Counterparties, pending return to the 1^st Defendant and/or 2^nd Defendant as contemplated under this Order;

(f) to ascertain whether, and if so, identify any Counterparty who, on or after 19 June 2012, disposed of all or any Titan shares at a price equal to or higher than the price at which s/he purchased those shares from the 1^st Defendant or 2^nd Defendant and if yes, to report such information to the Plaintiff with a copy to the 1^st Defendant and/or 2^nd Defendant as soon as reasonably practicable with details of the quantity and price(s) at which such shares were acquired and disposed of;

(g) to carry out his functions and duties expeditiously and use all reasonable efforts to pay the amounts due to the Counterparties in full within 3 months of the date of this Order and in any event as soon as reasonably practicable;

(h) to transmit payments to the Counterparties entitled to a payment in such manner as may be determined by the Administrator in accordance with paragraph 3(b) above;

(i) to keep proper accounts of all the payments received and made and the shares of Titan that have been received pursuant to this Order and to report to the Court and the Plaintiff upon conclusion of the distribution of the Funds;

(j) to return to the 1^st Defendant and 2^nd Defendant shares of Titan that have been received from the Counterparties;

(k) to appoint agents to do any business which the Administrator is unable to do himself;

(l) with the leave of the Court to appoint solicitors (whose fees will be subject to taxation by the Court) to advise on any points of law arising in the course of the administration (in relation to which the Administrator, the Plaintiff and the 1^st and 2^nd Defendants cannot reach agreement), subject always to the right of the Plaintiff and the 1^st and 2^nd Defendants to be heard by the Administrator in respect of such points of law. Unless all parties are in agreement on any such legal advice received by the Administrator, the Administrator shall refer any dispute as to such point of law to the Court for resolution; and

(m) to do all other things incidental to the exercise of the Administrator’s functions or the foregoing powers.

6. The 1^st Defendant and 2^nd Defendant shall pay all the expenses and disbursements to be incurred by the Administrator (including any fees of solicitors and agents incurred pursuant to paragraphs 5(k) and 5(1) above (if any)) within 14 days from the date on which the Administrator notifies the 1^st Defendant and 2^nd Defendant of such expenses and disbursements.

7. The 1^st Defendant and 2^nd Defendant shall pay the Plaintiff’s costs of this action, to be taxed if not agreed.

8. The balance of the Funds (if any) after the payments in paragraph 3(b) above have been made shall, unless otherwise directed by the Court, forthwith be paid by the Administrator into Court to the credit of these proceedings, subject to further order.

9. The parties and the Administrator shall be at liberty to apply for the purpose of carrying out the terms of this Order.

10. All further proceedings in this action be stayed except for the purposes of or connected with carrying this Order into effect for which purpose the parties and the Administrator are to be at liberty to apply.