【SFC Action】First Securities Fraud Case Involving Illegal Short Selling to Have Initial Hearing on April 9

SocialAnxietyStaker · 2026-03-20T10:31:44+00:00

Two male defendants, Chan Hoi-shing and Lee Po-ching, are suspected of illegally shorting 28 listed companies and are charged with securities fraud. The case has been transferred to the District Court, with the first hearing scheduled for April 2026. Both defendants have been released on bail but are prohibited from leaving Hong Kong. The case has been brought by the Securities and Futures Commission of Hong Kong, and they could face a maximum of 7 years imprisonment.

SocialAnxietyStaker

2026-03-20 10:31:44

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Two male defendants, Chen Haicheng and Li Baocheng, are accused of illegally short selling 28 listed companies and are charged with securities fraud. The Eastern District Magistrates’ Court approved the Department of Justice’s application on Friday (20th) to transfer the case to the District Court for criminal proceedings. The first hearing is scheduled for April 9, 2026, and both defendants are granted extended bail.

The case was initiated by the Hong Kong Securities and Futures Commission and is the first securities fraud case involving illegal short selling. It is prosecuted under Section 300 of the Securities and Futures Ordinance in the District Court. The District Court has a higher jurisdiction than the Magistrates’ Court; it handles civil claims involving amounts from HKD 75,000 up to HKD 3 million. In criminal cases, the maximum sentence for a District Court judge is 7 years in prison.

The Magistrates’ Court has broader criminal jurisdiction, handling various indictable offenses and summary offenses, with a maximum penalty of 2 years’ imprisonment and a HKD 100,000 fine. However, when the court deals with two or more indictable offenses simultaneously, the magistrate can impose a maximum sentence of 3 years. For certain statutes, a single offense can carry a sentence of up to 3 years’ imprisonment and a HKD 5 million fine.

Defendants Chen Haicheng and Li Baocheng allegedly made false claims between May 27, 2020, and December 29, 2020, that Chen held sufficient shares in the 28 companies to support their short selling, and engaged in illegal short selling transactions related to these companies’ shares, profiting approximately HKD 11 million, in violation of Section 300 of the Securities and Futures Ordinance.

Chen Haicheng and Li Baocheng are granted bail but are not allowed to leave Hong Kong, must surrender all travel documents, report regularly to the police station, and each pay HKD 280,000 in bail. They are also required to reside at their declared addresses and notify the police of any change of residence.

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