The Securities and Futures Commission (SFC) of Hong Kong has initiated legal proceedings against Andrew Lo, the Chairman and controlling shareholder of both LET Group Holdings and Summit Ascent Holdings. This legal action follows allegations of misconduct related to the handling of a substantial business transaction involving both companies’ Russian assets. As a result, trading of shares for LET Group and Summit Ascent has been suspended.
The SFC’s legal complaint, filed under section 214 of Hong Kong’s Securities and Futures Ordinance, seeks to protect independent minority shareholders by pursuing a share repurchase order. Should the court approve this, Andrew Lo, LET Group, and Summit Ascent would be required to offer to repurchase shares from minority shareholders at a price determined by the Court. Additionally, the SFC is requesting a disqualification order against Lo for his alleged mismanagement, according to Inside Asian Gaming.
Suspension of Shares and the Failed Russian Asset Sale
The legal action stems from Lo’s involvement in an attempted sale earlier this year of the Russian asset linked to Tigre de Cristal, a resort owned by Summit Ascent, a subsidiary of LET Group. This planned sale, aimed at securing funding for a $1.1 billion casino development in Manila, was not brought to fruition. However, the SFC raised concerns that the deal, classified as a “very substantial disposal,” was undertaken without receiving the necessary approval from shareholders. This led the Hong Kong Stock Exchange to suspend trading of both companies’ shares in February 2024.
While the sale of Tigre de Cristal ultimately fell through, it caused significant internal friction, leading to a mass resignation of board members from both companies. Directors objected to the way the transaction was handled, particularly Lo’s alleged disregard for legal advice and shareholder concerns. Despite the collapse of the transaction, the fallout from these events has prompted further regulatory scrutiny.
SFC’s Allegations Against Andrew Lo
The SFC’s investigation revealed that Lo “deliberately disregarded the applicable Listing Rules” and moved forward with the sale of Russian assets without necessary disclosures to shareholders. The regulator also noted that Lo ignored advice from his legal team regarding non-compliance issues and failed to address the objections raised by fellow board members.
In its legal filing, the SFC claimed Lo continued to press ahead with the transaction without informing shareholders of the compliance issues, further exacerbating the situation. This behavior, the SFC argues, was reckless and contributed to the suspension of both LET Group and Summit Ascent shares.
The regulator’s legal case emphasizes that Lo’s actions not only breached the Hong Kong Stock Exchange’s Listing Rules but also violated the Code on Takeovers and Mergers, creating significant risks for shareholders. The SFC’s legal proceedings aim to rectify this by pushing for the repurchase of shares from independent minority shareholders who may have been adversely affected by Lo’s conduct.
Tigre de Cristal and the Future of LET Group
LET Group, previously known as Suncity Group, has been heavily involved in casino investments, including its majority stake in Tigre de Cristal, a resort located in Primorye, Russia. Summit Ascent, which operates the casino, continues to hold a 77.5% interest in Tigre de Cristal through Oriental Regent, the casino’s operating entity. However, the controversy surrounding the asset sale has cast a shadow over the company’s ongoing operations.
Despite the troubles, shareholders in LET Group approved a plan in August to divest from Tigre de Cristal, a move that signals the company’s intention to distance itself from its Russian investments. The sale is seen as an attempt to streamline the group’s assets and focus on other projects, such as the Manila casino development.
Andrew Lo’s role as Chairman became more prominent following the arrest of former Suncity Group Chairman Alvin Chau in 2021. Lo assumed control of both LET Group and Summit Ascent during this turbulent period. His leadership, however, is now being scrutinized due to the alleged failures in governance and transparency during the attempted sale of Tigre de Cristal.
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