HK regulators in boiler room clampdown
Backed by court orders, the Securities and Futures Commission froze the online activity of three unlicensed securities trading firms alleged to be engaged in fraudulent schemes.
The SFC obtained orders from the Court of First Instance to suspend the activities of trading firms Broadspan Securities (www.broadspansecurities.com); Shepherds Hill Partners, Hong Kong (www.shepherdshillhk.com); and Rich Futures (HK) Limited (www.richfutureshk.com).
Regulators allege that these entities engaged in fraudulent boiler room activities and received monies from investors.
The SFC defines a boiler room as an unlicensed entity advertising itself as licensed and playing a shell game with investors cash:
"The usual way a boiler room works is that they call investors claiming to be in Place A, but are actually in Place B. They ask the investors to invest in a financial product in Place C and to send money to an account in Place D.
"Often a boiler room will transfer money received from the investors from an account in one place to an account in another place almost as soon as it has been received. By the time the fraud has been discovered, the money has disappeared or been transferred out of reach."
On 19 December, the SFC obtained interim injunctions to freeze approximately HK$4.3 million ($554,000) in the bank accounts held by six entities: Timeprime Limited; Lynwin Limited; Resmart Limited; Fieldmark Corporation Limited; DH Corporation Limited and SMD Partnership Limited.
"The SFC suspects that these bank accounts were used by Broadspan, Shepherds Hill and Rich Futures for receiving money from investors," the regulator said.
The investigation is continuing.