The Hong Kong Securities and Futures Commission (SFC) has fined asset manager Value Partners and its subsidiary Value Partners Hong Kong a total of HK$4m (US$515,644) for failures to comply with the regulatory requirements in managing two SFC-authorised funds.
The SFC announced the reprimand and fines via a statement that said that the regulator found that the two funds, namely, Value Partners China Greenchip Fund Limited (Greenchip Fund) and Value Partners Greater China High Yield Income Fund (High Yield Fund), had issued shares in excess of their authorized share capital as provided in their Memorandum and Articles of Association.
In doing so, the SFC deemed that the fund managers failed to manage the funds in accordance with Code on Unit Trusts and Mutual Funds.
The SFC also found that Value Partners did not report the incidents to the SFC until six months after they were uncovered. The firms will each pay HK$2m (US$257,822) as a result of the incidents.
The regulator said that it considers the incidents “serious” as they called into question the validity of the shares issued to investors of the funds.
In deciding the penalties, the SFC took into account that Value Partners co-operated with the SFC in resolving the SFC’s concerns; took actions to rectify the failures and there were no apparent investor losses; and engaged an independent reviewer to conduct a review of Value Partners’ internal control systems with respect to all SFC-authorized funds managed by Value Partners.