On 26 May 2026, the Securities and Futures Commission banned Paul Wan Kai Leung for life. He was the former responsible officer, manager-in-charge and director of Nerico Brothers Limited. The Hong Kong regulator prohibited him from re-entering the industry under the Securities and Futures Ordinance. The Statement of Disciplinary Action follows earlier sanctions against Nerico Brothers Limited and its director Jerff Lee Cheuk Fung. The case concerns the misuse of client funds, facilitation of misappropriation, and false information given to the SFC. Wan authorised transfers and executed documents that enabled the misuse of over US$68 million. He also facilitated the misappropriation of approximately US$154 million belonging to one client. The SFC found his conduct egregious, dishonest, and damaging to market integrity.
Basis of the Disciplinary Action
The Securities and Futures Commission (SFC) prohibited Paul Wan Kai Leung (Wan) from re-entering the industry for life pursuant to section 194 of the Securities and Futures Ordinance (SFO). Wan was a former director, responsible officer (RO) and manager-in-charge (MIC) of core functions of Nerico Brothers Limited (NBL).
Wan served as a director of NBL from 1 October 2000 to 10 August 2022. He was accredited to NBL and approved to act as its RO across several regulated activities, including Type 2 (dealing in futures contracts) and Type 9 (asset management) between 1 April 2003 and 19 June 2022. He also held MIC responsibilities for core functions including Compliance, Anti-Money Laundering and Counter-Terrorist Financing, and Risk Management at various periods between 29 June 2017 and 19 June 2022. Wan is currently not licensed by the SFC.
The disciplinary action relates to the SFC’s earlier sanction against NBL for misusing funds belonging to its client, Company X, between June 2020 and June 2021, knowingly facilitating the misappropriation of Company X’s funds since 2021, and knowingly providing false or misleading information to the SFC.
The Trading Account and the Missing Funds
Company X opened a trading account (Account) with NBL in June 2020. By September 2021, Company X had transferred over US$172 million into the Account. From October 2021, Company X repeatedly demanded the return of all funds, which stood at approximately US$154 million as of January 2022. Despite these requests, NBL failed to return the account balance.
Misuse of Company X’s Assets
Between June and December 2020, Company X deposited over US$77 million with NBL for spot forex (SFX) trading. Less than 12% of the funds were allocated for SFX trading on behalf of Company X. The remaining funds, totalling over US$68 million, were used by NBL without Company X’s knowledge to subscribe for shares in two segregated portfolios of a Cayman-incorporated fund (Fund) on six occasions for NBL’s own account. By June 2021, the shares were fully redeemed and the subscription principals returned to the Account, while NBL retained the profits.
This conduct violated the express terms of the client agreement (Client Agreement), which required NBL to operate the Account in accordance with Company X’s written instructions. NBL breached the agreement by using the funds for its own benefit without written instruction, authorisation or consent, and without meeting the conditions outlined in the Client Agreement.
The misuse breached General Principle (GP) 8 and paragraph 11.1(a) of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct), which require licensed persons to ensure that client assets are promptly and properly accounted for and adequately safeguarded.
Facilitating the Misappropriation
The SFC found that NBL knowingly facilitated a scheme orchestrated by Neo Ng Yu (Neo Ng) and his connected persons and entities, resulting in the misappropriation of approximately US$154 million of Company X’s funds held in the Account since January 2021.
Neo Ng has been a substantial shareholder of Company X’s holding company, formerly listed on the Main Board of The Stock Exchange of Hong Kong Limited, since 23 December 2020. He also served as a director of Company X from 15 July 2021 to 20 January 2022.
Between January and August 2021, NBL transferred almost all of Company X’s funds in the Account to one of the segregated portfolios of the Fund (Sub-fund), purportedly for the acquisition of “liquidity provider units” (LP Units). Neo Ng served as a director of the Sub-fund from 1 April 2019 to 30 July 2021 and was the ultimate sole shareholder and a director of the company that acted as the fund manager for the Sub-fund during the relevant period.
Two Contradictory Narratives
During the SFC’s inquiry and investigation, NBL presented two contradictory narratives to explain the transactions. In response to a request under section 180 of the SFO, NBL claimed that Company X’s funds were transferred to the Sub-fund to acquire LP Units issued by the Sub-fund, relying on a set of transaction documents and account statements. Subsequently, in response to notices under section 183 of the SFO, NBL claimed the funds were transferred to acquire LP Units issued by a separate Cayman-incorporated fund (Second Cayman Fund), supported by a different set of documents.
The SFC’s investigation revealed that neither the Sub-fund nor the Second Cayman Fund had issued any LP Units at any material time. Company X’s funds therefore could not have been transferred to acquire LP Units. The funds transferred to the Sub-fund were misappropriated by Neo Ng and his connected persons and entities. A substantial amount of the traceable proceeds was transferred to a corporate vehicle of Neo Ng, part of which was further dissipated to accounts belonging to Neo Ng and his other corporate vehicles. Some traceable proceeds were used by the Sub-fund for its own purposes, including fulfilling redemption requests, paying dividends and settling charges.
The SFC found that NBL and its director, Jerff Lee Cheuk Fung (Lee), were closely connected with Neo Ng. Both contradictory narratives were false and concocted to conceal the misappropriation and the true whereabouts of Company X’s funds. NBL either fabricated or employed fabricated documents to further these purposes.
By knowingly facilitating the misappropriation, NBL breached GP 8 and paragraph 11.1(a) of the Code of Conduct, as well as GP 1, which requires licensed persons to act honestly, fairly, and in the best interests of their clients and the integrity of the market.
Provision of False or Misleading Information
Under section 180(15) of the SFO, it is an offence for a person, in purported compliance with a requirement under section 180, to knowingly or recklessly produce any record or document or give an answer that is false or misleading in a material particular. Section 184(2) creates a similar offence in relation to requirements under section 183(1).
NBL provided the SFC with two false narratives relying on two sets of fabricated documents. Its shift from one false narrative to another as the investigation progressed, along with its possession and use of two contradictory sets of supporting documents, demonstrated a clear intention to mislead and deceive the SFC. The SFC found that NBL knowingly produced records and documents and made representations that were false or misleading in a material particular, in breach of sections 180(15) and 184(2) of the SFO.
The Roles of Lee and Wan
The SFC determined that the misconduct of NBL was directly attributable to the actions of Lee and Wan. Lee, as a director of NBL and the person in charge of handling Company X and its funds, was the directing mind and will behind NBL’s conduct in misusing the funds and facilitating their misappropriation by Neo Ng, with whom he had a close connection.
Wan, as a director, RO and MIC of NBL, played a central role in the misconduct. He executed the relevant subscription and transaction documents and authorised the transfers of Company X’s funds from NBL to the Sub-fund during the relevant period. Lee and Wan caused NBL to produce false or misleading information and documents to the SFC to conceal and disguise the misappropriation by Neo Ng.
Lee and Wan personally breached section 184(2) of the SFO by knowingly providing false or misleading answers and explanations during their respective interviews with the SFC. Their conduct was fundamentally incompatible with the standards expected of the senior management of a licensed corporation under GP 9 of the Code of Conduct and cast serious doubt on their fitness and properness to be regulated persons.
Procedural History and the SFC’s Decision
The SFC issued a decision in August 2025 to ban Wan for his misconduct. Wan applied to the Securities and Futures Appeals Tribunal for a review of the SFC’s decision in October 2025. He subsequently withdrew the review application in May 2026.
Having considered all the circumstances, the SFC concluded that Wan is guilty of misconduct and not fit and proper to be licensed. In deciding the sanction, the SFC took into account that the conduct of Wan was egregious and serious, undermining the confidence of investors and the public in market integrity; that his honesty and integrity were compromised; and that his conduct caused significant losses to Company X.
The SFC has separately revoked the licence of NBL and banned Lee from engaging in all regulated activities for life, as detailed in its press release dated 28 August 2025. Related disciplinary actions against Neo Ng and Amber Hill Capital Limited (AHCL), the manager of the Sub-fund at the material time, were also addressed in that release.
(Source: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=26PR74, https://apps.sfc.hk/edistributionWeb/api/news/openAppendix?lang=EN&refNo=26PR74&appendix=0)
