The Securities and Futures Commission (SFC) has commenced legal proceedings seeking an order to require Ng Yu, former chairman of Target Insurance, to buy out public shares due to an alleged breach of fiduciary duties, while also seeking disqualification orders against him and 10 other former directors.
The legal action arises from Nerico Brothers Limited's (NBL) failure to repay more than US$150 million (HK$1.17 billion) that Target Insurance had placed with it between June 2020 and October 2021 for the purported purpose of algorithmic trading in foreign currencies.
The SFC alleges Ng was a party to a fraudulent scheme intended to misappropriate the funds by transferring them to a Cayman-incorporated fund managed by Amber Hill Capital Limited and controlled by him.
But for Ng's misconduct, trading would not have been suspended and ultimately delisted, and shareholders would have been able to sell their shares on the open market to recover their investments.
The other 10 former directors who are named respondents in the SFC's legal proceedings include: Haywood Cheung, former executive director and chairman; Chan Hok-ching, Rui Yuanqing and Wei Weicheng, former executive directors; Lau Ka-yee, former executive director and chief financial officer; Jimmy Muk Wang-lit, former executive director and chief executive officer; Peter Wan Kam-to, Alexander Leung Ho-yin and Wong Shiu-hoi, former independent non-executive directors; and one other former executive director.
These other respondents are alleged to have been negligent in allowing the funds to be deposited with NBL despite the significant concentration risk involved.
They are also alleged to have failed to take reasonable steps to put in place sufficient safeguards and oversight mechanisms to prevent the loss of the funds.
