The regulator found that the two funds, Value Partners China Greenchip Fund and Value Partners Greater China High Yield Income Fund, had issued shares in excess of their authorised share capital.
In doing so, the firms failed to manage the funds in accordance with the Code on Unit Trusts and Mutual Funds.
The SFC also found that Value Partners did not report the incidents until six months after they were uncovered.
The two firms will pay HK$2m each.
Serious incident
The regulator said it considers the incidents to have been serious as they called into question the validity of the shares issued to investors of the funds.
In deciding the penalty, the SFC took into account that Value Partners:
- co-operated with the SFC in resolving the SFC’s concerns;
- took actions to rectify the failures and there were no apparent investor losses; and
- engaged an independent reviewer to conduct a review of Value Partners’ internal control systems with respect to all SFC-authorised funds managed by Value Partners.
