The Securities and Futures Commission said on Friday that it has directed The Stock Exchange of Hong Kong to suspend dealings in the shares of Silver Grant International (0171) with effect from 9 am, citing the suspected diversion of over HK$1 billion in loan proceeds to the company's then-major shareholder and related parties.
This came as Silver Grant granted numerous unsecured loans totalling approximately HK$2 billion between March 2021 and December 2023.
The SFC's investigation has uncovered information suggesting that over HK$1 billion, or about 63 percent of the loans, was indirectly remitted to Silver Grant's then-major shareholder or its related party through a series of rapid onward transfers.
This raises serious questions as to whether the purported borrowers were the genuine beneficiaries of the Loans and whether the loans served any genuine commercial purpose, the regulator said.
The SFC also found evidence suggesting that the due diligence reviews and credit assessments conducted by Silver Grant in relation to the loans were insufficient.
The serious concerns arising from the evidence uncovered during the investigation were put to Silver Grant to give the company an opportunity to address them, but it failed to address the SFC’s concerns satisfactorily, the SFC noted.
In particular, the company failed to provide explanations on the commercial rationale for granting the loans, it added.
Given the significance of the SFC’s concerns in relation to the financial position of Silver Grant, the regulator considers that suspending dealings in Silver Grant’s shares is necessary or expedient to maintain an orderly and fair market and to protect the interests of the investing public.
The investigation is ongoing, SFC said.
