The Securities and Futures Commission (SFC) has warned that investors and intermediaries could face criminal prosecution for illegal short selling if they sell placing shares before completion of a placement. Recent SFC investigations revealed some misconceptions in the market on the selling of placing shares prior to completion of a placement. The SFC points out that, under the Securities and Futures Ordinance (SFO), a person shall not sell securities at or through a recognised stock market unless at the time he sells them: 1. he has or, where he is selling as an agent, his principal has; or 2. he believes and has reasonable grounds to believe that he has or, where he is selling as an agent, that this principal has, a presently exercisable and unconditional right to vest the securities in the purchaser of them.
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