Zhongyang (Sean) Meng and Jiashun (Sam) Qian have been ordered to pay pecuniary penalties of $180,000 and $130,000 respectively for market manipulation and disclosure breaches involving Oceania Natural Limited (ONL) shares.
In 2019 the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko brought Auckland High Court civil proceedings against four individuals in relation to trading of Oceania Natural shares between April 2016 and April 2017. Oceania Natural Limited listed on the NXT board on 31 March 2016, delisted on 29 June 2018 and was placed into liquidation on 18 June 2019.
Before the case went to trial, Mr Meng and Mr Qian, both chartered accountants, admitted to several market manipulation breaches, while Mr Meng also admitted to failing to disclose a relevant interest in the trading of shares. A recent judgment from Justice Geoffrey Venning has ordered Mr Meng to pay a pecuniary penalty of $180,000 and Mr Qian to pay a pecuniary penalty of $130,000.
Mr Meng was a shareholder and director of Oceania Natural, as well as a director of Meng & Associates, an accounting firm that provided services to, and shared office space with, Oceania Natural. Mr Qian was an Oceania Natural shareholder and accountant for Meng & Associates. He did not have any governance role in Oceania Natural.
The other two defendants - Wei (Walker) Zhong and Lei (Regina) Ding - defended the case brought against them. The trial concluded on 9 March 2022 and Justice Michael Robinson, who heard the case, reserved his decision.
Defendants should have known
Mr Meng and Mr Qian accepted that they should have known their trading caused - or could have caused - a false or misleading appearance with respect to trading in Oceania Natural shares.
Karen Chang, FMA Head of Enforcement, said: "We welcome this judgment as it shows there are considerable penalties for those who breach market manipulation prohibitions. We have no tolerance for misconduct of this nature as it can significantly undermine the integrity of New Zealand's markets and investor confidence.
"Equally, our market disclosure obligations are part of an overall disclosure regime that is the central tenet of transparent markets. Directors should remain aware of their disclosure obligations, especially when trading their own company's shares - even on behalf of others, such as in this case."
Market manipulation is prohibited by section 265 in the Financial Markets Conduct Act, while disclosure obligations are contained in section 297.
