Hong Kong Securities and Futures Commission: Revokes Anshan Capital's license and bans its two former executives from regulated activities for life.

On August 28, the Securities and Futures Commission of Hong Kong revoked the license of Anshan Capital Limited (Anshan Capital) for causing funds to be misappropriated and engaging in other dishonest activities related to fund management. The former senior executives of Anshan Capital, Wu Yu and Wu Shuzhen, have been banned for life from engaging in any regulated activities. The Securities and Futures Commission stated that between October 6, 2017, and September 29, 2021, Anshan Capital served as the manager of an independent investment portfolio under a fund registered and established in the Cayman Islands. The investigation by the Securities and Futures Commission revealed that Wu Yu and his associates planned to misappropriate approximately $154 million belonging to a client of Nerico Brothers Limited (NBL) through this sub-fund. Anshan Capital knowingly facilitated this plan. Specifically, under this plan, NBL transferred the client's funds to the sub-fund from January to August 2021, claiming it was for purchasing "liquidity provider units" from the sub-fund. Despite the sub-fund not issuing or holding any such units, Anshan Capital accepted the funds transferred by NBL. Subsequently, Anshan Capital instructed the sub-fund to transfer most of the profits to a company owned by Wu Yu and used the remaining profits for the sub-fund's own purposes. Providing false information and forged documents regarding the sub-fund During their tenure as fund managers, Anshan Capital falsely claimed to the sub-fund's auditors and administrators that NBL was one of the brokerage firms used for trading activities by the sub-fund, and the majority of the cash assets of the sub-fund were held in an account opened with NBL (NBL account). Anshan Capital also claimed that Wu Yu subscribed to shares of the sub-fund through a company controlled by him three times, involving a total of $297 million and transferred the subscription funds to the alleged NBL account. However, the investigation by the Securities and Futures Commission revealed that the sub-fund was not a client of NBL and did not hold any accounts with NBL. In these circumstances, the claims by the sub-fund regarding cash assets held at NBL did not exist, and its cash holdings were exaggerated from November 2019 to May 2021 by claiming a surplus of up to $451 million in the NBL account. Furthermore, from November 2019 to September 2021, Anshan Capital provided false information and forged documents about the value and financial condition of the sub-fund, including forged auditor reports, to mislead investors and potential investors. Responsibility of senior management The Securities and Futures Commission believes that the misconduct of Anshan Capital can be directly attributed to the actions of Wu Yu and Wu Shuzhen. Wu Yu was the mastermind and planner of these schemes. He personally profited from the misappropriated funds of NBL clients and the inflated value of the sub-fund. On the other hand, Wu Shuzhen played an active role in dissipating misappropriated funds to Wu Yu's company from NBL, and colluded with Wu Yu in these schemes by providing false information and forged documents to the sub-fund's auditors and administrators. In summary, their actions were extremely dishonest and fell far below the standards expected of senior management of licensed corporations. When deciding on the disciplinary actions against Anshan Capital, Wu Yu, and Wu Shuzhen, the Securities and Futures Commission took into account: - The extremely egregious and serious nature of their actions, damaging investor and public confidence in the integrity and stability of the market; - The significant losses caused to NBL's clients by their actions; and - Their lack of disciplinary records prior to this incident.