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HCMA 430/2014

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

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COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 430 OF 2014

(ON APPEAL FROM ESS NO 30881-84 OF 2012)

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BETWEEN

SECURITIES AND FUTURES COMMISSION

and

PACIFIC SUN ADVISORS LTD

1st Appellant

MANTEL ANDREW PIETER

2nd Appellant

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Respondent

Before: Hon Zervos J in Court

Date of Hearing: 26 August 2015
Date of Judgment: 26 August 2015

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JUDGMENT
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Introduction
1.This is an appeal by the appellants against their convictions and
sentences pronounced by Mr Joseph To, a Magistrate at

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Eastern Magistrates Court (the Magistrate), on 10 June

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2014, following a remittance of the case from Bokhary J

(the Judge) on 24 January 2014. The decision of the Judge

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went on appeal to the Court of Final Appeal and in

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consequence of its decision dated 20 March 2015, it is

agreed that the convictions should be quashed and the

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sentences set aside.

See Securities and Futures

Commission v Pacific Sun Advisors Ltd and Andrew Pieter

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Mantel, FACC No. 11 of 2014, 20 March 2015, unreported.

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Background

2.The underlying criminal proceedings were instituted by the Securities

and Futures Commission (the SFC) against the 1st and 2nd
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appellants and the case came on before the Magistrate on

17 January 2013.
3.The 1st appellant was charged by way of two summonses (ESS 30881
and 30883 of 2012) with the issue of two advertisements,
invitations or documents relating to a fund launched by the

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1 appellant, being the Pacific Sun Greater China Equities

Fund (the Fund), without obtaining an authorization from
the SFC for the issuing of the advertisements, contrary to s

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103(1)(b) and s 103(4)(b) of the Securities and Futures

Ordinance, Cap 571 (SFO).

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4.The 2nd appellant was at all material times the sole director of the 1 st
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appellant and he was also charged, by way of two

summonses (ESS 30882 and 30884 of 2012) that

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corresponded to those laid against the 1st appellant, under s

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390 of the SFO in relation to the 1 st appellants alleged

breaches of s 103(1)(b) of the SFO.

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5.The appellants contested the proceedings and after trial on 21 March

2013 the Magistrate acquitted them in respect of all

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summonses. It appears the Magistrates verdict was based

on two matters. First, he was unable to conclude that the

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advertisements in question contained an invitation to the

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public to invest in the Fund, and secondly, the professional

investor exemption as provided for in s 103(3)(k) of the

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SFO applied.
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6.The SFC appealed by way of case stated to the Court of First Instance
on the basis that the Magistrate erred in respect of these

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two matters. On 24 January 2014, the SFCs appeal was

allowed in relation to both matters and the acquittals were
set aside and the Judge remitted the matter back to the
Magistrate to continue with the case.

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7.The appellants appealed the decision of the Judge to the Court of Final

Appeal in relation to the applicability of the professional

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investor exemption.

8.In the meantime, the trial proceeded before the Magistrate and on 10
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June 2014 he convicted both appellants in respect of all

summonses. He sentenced the 1st appellant by way of a

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$10,000 fine on each summons and the 2nd appellant to

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concurrent terms of 4 weeks imprisonment suspended for

12 months on each summons.

The appellants appealed

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against the Magistrates convictions and sentences and this

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is the appeal before me now.

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The Court of Final Appeal decision

9.On 20 March 2015, the Court of Final Appeal allowed the appellants

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appeal and held that the professional investor exemption

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applied on the facts as originally found by the Magistrate.

Fok PJ in his judgment (with whom the other judges

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agreed) said:
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56.
It follows also that I would set aside the Judges order remitting the matter to the
Magistrate to continue the case since his original decision acquitting the appellants was
correct and should not have been reversed. The Magistrates subsequent convictions
following the remitter are under appeal and although the disposition of that appeal is not a
matter before us, its outcome will now follow this judgment.

The SFCs position

10.The SFC acknowledges that in the circumstances it accepts that the
subsequent convictions following the remitter ought to be

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quashed on the basis of the decision of the Court of Final

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Appeal that the professional investor exemption applied.

As stated by Fok PJ, the further hearing was unnecessary

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and the original acquittals ought to have stood as valid.

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The SFC also acknowledges that it cannot resist the

appellants entitlement to the costs of these proceedings and

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below.
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11.The SFC, however, expressly states in its submissions that it does not
accept that the Magistrates findings in the second trial in

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relation to the question of whether the advertisements in

this case contained an invitation to the public to invest in
the Fund were wrong. The appellants in their notices of

appeal dispute the findings and argue that the Magistrate

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should have taken other factors into account when

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determining whether the relevant communications were

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advertisements by virtue of s 103(10) of the SFO.

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12.It is not a matter for me to address or resolve as the SFC accepts that
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the convictions should be quashed and the sentences set

aside, so I make no decision on the issue.

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Disposition of the appeal

13.In light of the foregoing, I make the following orders by agreement
of the parties:

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(1) The Magistrates convictions in ESS 30881, 30882, 30883 and

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30884 of 2012 dated 10 June 2014 be quashed;

(2) The Magistrates order in ESS 30882 and 30884 of 2012 that

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the 2nd appellant be sentenced to a period of imprisonment for

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4 weeks suspended for 12 months on each of the charges be set

aside;

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(3) The Magistrates order in ESS 30881 and 30883 of 2012 that
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the 1st appellant pay a fine of $10,000 on each of the charges

be set aside and the fines already paid be refunded to the

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1 appellant; and
(4) The 1st and 2nd appellants costs of this appeal and all the
proceedings below be paid by the SFC, to be taxed if not

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agreed.
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-7(Kevin Zervos)
Judge of the Court of First Instance
High Court
Mr James Sherry, instructed by Tanner De Witt, for the 1 st and
2nd appellants
Mr Derek C.L. Chan, instructed by and for the Securities and Futures
Commission

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