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Nomura International (Hong Kong) Ltd And Others v Securities And Futures Commission

Judgment Cited in Precedent Map Related
Vincent
Judgment Date21 October 1998
Citation[1999] 1 HKLRD 607;(1997-1998) 1 HKCFAR 250
Judgement NumberFAMV14/1998
Subject MatterMiscellaneous Proceedings (Civil)
CourtCourt of Final Appeal (Hong Kong)
FAMV000014/1998 NOMURA INTERNATIONAL (HONG KONG) LTD AND OTHERS v. SECURITIES AND FUTURES COMMISSION

FAMV000014/1998

FAMV No. 14 of 1998

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 14 OF 1998 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACV No. 34 OF 1998)

_____________________

Between:
NOMURA INTERNATIONAL (HONG KONG) LIMITED AND OTHERS
Applicants
AND
SECURITIES AND FUTURES COMMISSION
Respondent

_____________________

Appeal Committee: Chief Justice Li, Mr Justice Litton, PJ and Mr Justice Ching, PJ

Date of Hearing: 16 October 1998

Date of Determination: 21 October 1998

____________________________

D E T E R M I N A T I O N

____________________________

Mr Justice Litton, PJ:

Introduction

1. The background facts leading to this application for leave to appeal can be briefly stated. They go back some 2 1/2 years, to 29 March 1996 when there were unusual transactions effected by Nomura International (Hong Kong) Limited in the Australian share and futures markets. The suspicion of the regulatory authorities in Sydney, London and Hong Kong was that Nomura (in its various corporate guises) was effecting false and misleading transactions and thus manipulating the markets. The positions taken in those markets were in the name of Nomura UK, but the trades on 29 March 1996 were done through the agency of Nomura Hong Kong.

2. In Australia, the investigations by the Australian Securities Commission led to a civil action being instituted by the Commission on 25 February 1997 against Nomura UK in the Federal Court (Action No. N63045 of 1997). The action was taken under various sections of the Corporations Law. The allegations against Nomura UK were, in essence, that the impeached transactions were false and misleading, in contravention of statute. There were pleadings and discovery in that action and, at the end of November 1997, the case was listed for a directions hearing before the designated trial judge. In Hong Kong, investigations by the Securities and Futures Commission (SFC) led eventually to a letter dated 23 October 1997, written by solicitors on its behalf, in which the SFC indicated its intention to take disciplinary action under the Securities Ordinance cap 333 and the Commodities Trading Ordinance cap 250 against Nomura HK and three other registered persons, officers of Nomura HK. Two of these persons were traders: It was through them that the impeached transactions in Sydney were effected. I shall refer to Nomura Hong Kong and the three officers as the applicants. None of them are parties to the Australian proceedings. Under the two Ordinances the SFC has power, after inquiry, to revoke or suspend the registration of registered persons, or to reprimand such persons, on various grounds set out in the relevant sections, including misconduct. In the letter of 23 October 1997 the applicants were given 30 days to submit answers to matters of concern to the SFC: These matters had previously been set out in what are called "letters of mindedness" addressed to the applicants.

3. The applicants' response to the SFC's letter of 23 October 1997 was to apply for judicial review under Order 53 of the Rules of the High Court. This led to an inter partes hearing lasting 3 days: The judge (Stone J) found for the applicants: His order of 22 December 1997 reads:

"That there be an Order of prohibition whereby the [SFC] is prevented as regards the 1st, 3rd, 4th and 5th Applicants under section 56(2) of the Securities Ordinance, Cap. 333 or as regards the 3rd, 4th and 5th Applicants under section 36(2) of the Commodities Trading Ordinance, Cap. 250 from requesting responses to the respective 'Letters of Mindedness' prior to 31st May 1998."

4. The intended effect of this order was that the SFC should not proceed further with the disciplinary proceedings until after 30 May 1998.

The Judge's Order

5. That order, in the circumstances of this case, was an unusual one for the judge to make. The SFC was, in discharge of its statutory functions and duties, inquiring into suspicions of misconduct in financial markets by registered persons. The issue, in essence, was whether...

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