SFM fined $1.5m for short selling

Business | Samantha Wong 7 Dec 2018

The Securities and Futures Commission has fined SFM HK Management HK$1.5 million for failures relating to the short selling of Great Wall Motor Company (2333) shares in 2015 on behalf of a fund it managed.

On August 28, 2015, Great Wall announced its proposed bonus issue of shares, which was equivalent to 200 percent of its existing issued shares. The settlement date was expected to be October 13, 2015. SFM's team booked 1.616 million bonus shares into SFM's trading system on September 30 without segregating them into a restricted account. Consequently, the system indicated that a total of 2.424 million shares of Great Wall were available when in fact only 808,000 were available for trading at that point in time. Based on the erroneous information, one of the fund's managers placed an order to sell 2.424 million shares of Great Wall on October 2, causing the fund to become short by 1.616 million shares in Great Wall.

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