Financial Markets Authority v Zhong

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-647

[2023] NZHC 1841

BETWEEN
FINANCIAL MARKETS AUTHORITY

Plaintiff

AND

WEI (WALKER) ZHONG

First Defendant

LEI (REGINA) DING
Second Defendant

ZHONGYANG (SEAN) MENG
Third Defendant

JIASHUN (SAM) QIAN

Fourth Defendant

Hearing: 13 July 2023

Appearances:

N R Williams, S Chapman and J Liu for the plaintiff W W Zhong as self-represented first defendant

L R Ding as self-represented second defendant

Judgment:

13 July 2023

Reissued:

17 July 2023

RESULTS JUDGMENT OF ROBINSON J

[On Penalty]

This judgment was delivered by me on 13 July 2023 at 3:30 pm pursuant to Rule 11.5 of the High Court Rules

Solicitors/counsel: Meredith Connell S Chapman - FMA

…………………………………………………………………… Registrar/Deputy Registrar

N R Williams, Britomart Chambers, Auckland

Copy to: Mr Zhong and Ms Ding

FINANCIAL MARKETS AUTHORITY v WEI (WALKER) ZHONG [2023] NZHC 1841 [13 July 2023]

[1]For reasons I will set out in a separate judgment:

(a)I make orders in terms of the draft orders attached to the Memorandum of Counsel for the plaintiff dated 9 May 2023.

(b)Mr Zhong is to pay a pecuniary penalty of one million, three hundred and thirty thousand dollars ($1,330,000).

(c)Ms Ding is to pay a pecuniary penalty of seven hundred and sixty thousand dollars ($760,000).

(d)In each case there will be an order under s 493 of the Financial Markets Conduct Act 2013 that the penalty is to be applied first to pay the plaintiff’s actual costs in bringing the proceeding.

(e)Any other issues concerning costs are reserved.

Robinson J

CaseChat Overview and Summary

In the High Court of New Zealand, Auckland Registry, the Financial Markets Authority (FMA) filed a lawsuit against Wei (Walker) Zhong, Lei (Regina) Ding, Zhongyang (Sean) Meng, and Jiashun (Sam) Qian, seeking various penalties and remedies. The dispute centered on allegations of misconduct and breaches of financial regulations, specifically under the Financial Markets Conduct Act 2013. The primary legal issues before the court involved whether the defendants had engaged in activities that constituted serious market misconduct and, if so, what penalties should be imposed on each defendant.

The court examined the evidence presented by the FMA and the submissions from both the FMA and the defendants. The decision hinged on the extent of each defendant's involvement in the alleged misconduct and the gravity of their breaches. The court found that both Zhong and Ding had played significant roles in the activities that led to the FMA's proceedings. Zhong was held responsible for a more substantial breach, warranting a higher penalty, while Ding's role, though significant, was deemed less severe. Meng and Qian, on the other hand, were found not to have engaged in the misconduct to the same extent and thus were not subject to penalties.

The court ordered that Zhong pay a penalty of $1,330,000 and Ding pay a penalty of $760,000, with these amounts to first cover the FMA's actual costs. The court did not impose penalties on Meng and Qian but reserved the issue of other costs for a later determination. The penalties reflect the seriousness of the breaches and the need to deter similar conduct in the future.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

Hearing:	13 July 2023
Appearances:	N R Williams, S Chapman and J Liu for the plaintiff W W Zhong as self-represented first defendant L R Ding as self-represented second defendant
Judgment:	13 July 2023
Reissued:	17 July 2023