UNITED STATES OF AMERICA BEFORE THE SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7570 / September 3, 1998 SECURITIES EXCHANGE ACT OF 1934 Release No. 40394 / September 3, 1998 ADMINISTRATIVE PROCEEDING File No. 9692 : : In the Matter of :ORDER INSTITUTING PROCEEDINGS :PURSUANT TO SECTION 8A OF THE KUO-CHANG WONG, :SECURITIES ACT OF 1933 AND :SECTION 21C OF THE SECURITIES Respondent. :EXCHANGE ACT OF 1934, MAKING :FINDINGS AND IMPOSING CEASE- :AND-DESIST ORDER : I. The Commission deems it appropriate and in the public interest that public administrative proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") be, and hereby are, instituted against Kuo-chang Wong ("K.C. Wong" or "Respondent"), also known as Kuo-Chang Wang, K.C. Wong or Wang, and Francis Wong or Wang. II. In anticipation of the institution of these administrative proceedings, K.C. Wong has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings set forth herein, except as to the Commission's jurisdiction over him, which is admitted, K.C. Wong consents to the issuance of this Order Instituting Proceedings pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Cease-and-Desist Order. Accordingly, it is ordered that proceedings pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act be, and hereby are, instituted. III. On the basis of this Order and the Offer of Settlement of K.C. Wong, the Commission makes the following findings: A.RESPONDENT Respondent K.C. Wong, age 53, was at all relevant times Director and Secretary of KCC Group, Ltd., Director, Secretary and Treasurer of CN Investments, Ltd., and owner of Northgard Industries, Inc. K.C. Wong was also Hsi Jung Wu's business partner in the Taiwanese entity Green Summit Corporation. K.C. Wong is the brother of Yuchin Lin and the brother-in-law of Jui- teng Lin. B.OTHER RELEVANT PERSONS AND ENTITIES 1.LaserSight, Inc. ("LaserSight" or the "Company"), is a Delaware corporation with principal offices in Orlando, Florida. It is engaged in the development, manufacture and sale of optical materials, electronic components and laser systems used in medical applications. LaserSight's common stock is registered with the Commission pursuant to Sections 12(b) and 12(g) of the Exchange Act, and is quoted on NASDAQ and listed on the Boston Stock Exchange. 2.Jui-teng Lin, Ph.D., ("Dr. Lin"), age 49, was President and Chief Executive Officer of LaserSight until July 1994, and President of LaserSight's wholly-owned subsidiary, LaserSight Technologies, Inc., until his resignation on October 25, 1994. Dr. Lin is the brother-in-law of K.C. Wong and the husband of Yuchin Lin. 3.Yuchin Lin, ("Ms. Lin"), also known as Jeanette Lin, age 45, was employed as a bookkeeper of LaserSight until October 25, 1994. Ms. Lin is the sister of K.C. Wong and the wife of Jui-teng Lin. 4.Hsi Jung Wu was K.C. Wong's business partner in the Taiwanese entity Green Summit Corporation. 5.KCC Group, Ltd. ("KCC Group") is a corporation formed in Antigua, West Indies and located in Taipei, Taiwan. Respondent K.C. Wong was Director and Secretary of KCC Group at all relevant times. 6.CN Investments, Ltd. ("CN Investments") is a company located in Antigua, West Indies. Respondent K.C. Wong was the Director, Secretary and Treasurer of CN Investments at all relevant times. C.FACTS This matter involves K.C. Wong's participation in two sets of transactions orchestrated by Dr. Lin, the President and Chief Executive Officer of LaserSight, and his wife, Yuchin Lin. In the first set of transactions, Respondent served as an intermediary through which the Lins transferred approximately $365,000 in LaserSight corporate funds that were ultimately diverted diverted forfor the Lin's' personal benefit, but that were not disclosed in LaserSight's periodic filings with the Commission. In the second series of transactions, K.C. Wong posed as a straw offshore investor as part of a sham Regulation S transaction that was executed as part of an effort to enable the Lins to accomplish an unregistered distribution of LaserSight stock. 1.The "Consulting" Transactions In three transactions between April 10 and July 7, 1992, the Lins disbursed a total of $265,000 from LaserSight to K.C. Wong or Northgard Industries ("Northgard"), a Taiwanese lumber business controlled by K.C. Wong. The disbursements were falsely described in LaserSight's corporate records as consulting fees. Neither K.C. Wong nor Northgard performed any consulting services for LaserSight. In each instance, K.C. Wong deposited the funds into his own personal account at Standard Chartered Bank in Taipei, Taiwan. Also in each instance, within periods ranging between two to five weeks later, K.C. Wong transferred substantially all of those funds back to the Lins' personal bank account in Florida. Generally within a few days of receiving those funds back from K.C. Wong, the Lins used them to exercise LaserSight stock options that had been granted to them. In December 1992, Dr. Lin transferred $110,151.50 from LaserSight's corporate bank account to K.C. Wong's personal bank account in Hong Kong. The corporate records supporting that disbursement described it as "consulting" for the development of computer software to be performed by the Taiwanese entity Green Summit Corporation ("Green Summit"), a corporation also under the control of K.C. Wong. However, Green Summit was not a software design company, and no software was developed. Instead, on January 28, 1993, K.C. Wong transferred $110,000 to the Lins' personal bank account. The next day, on January 29, 1993, Ms. Lin repaid a $50,000 loan that she had taken from LaserSight on January 21, 1993, and the balance of the funds also was expended for personal purposes. 2.The Sham Regulation S Transaction To circumvent the registration requirements, in the spring of 1993 Dr. Lin engaged in a sham Regulation S transaction in order to remove a restrictive legend from certain LaserSight stock he owned with his wife. He caused KCC Group, an Antiguan entity, to be created for that purpose, and enlisted K.C. Wong to stand in as the nominal principal of KCC Group. On or about March 12, 1993, KCC Group entered into a purported transaction to purchase 160,000 shares of restricted, unregistered LaserSight common stock from the Lins for $700,000. The only business that K.C. Wong ever conducted through KCC Group was to purchase the 160,000 LaserSight shares from the Lins. In order to make the transaction appear to have substance, Hsi Jung Wu, K.C. Wong's business partner in Taiwan, was falsely identified as the director of KCC Group in two letters, one written by Dr. Lin and the other by Dr. Lin's stock broker. The first of those letters, dated March 8, 1993, implied that KCC Group was an arms-length buyer looking for Regulation S stock in the United States. The second letter, dated March 9, 1993, purported to confirm the terms of a transaction in which the Lins' would sell 160,000 shares of LaserSight stock in a Regulation S transaction in exchange for $700,000 to be paid in three installments. In fact, all of the funds used to purchase the shares were furnished by the Lins in a circular transaction through K.C. Wong, acting on behalf of KCC Group. Between February 26, 1993 and March 5, 1993, Dr. Lin wire transferred a total of $500,000 to an Antiguan bank account in the name of CN Investments, another foreign company sharing the same address as KCC Group and under K.C. Wong's control. K.C. Wong not only used that $500,000 to "purchase" the Lins' shares, he used some of it more than once. The day after K.C. Wong wire transferred the first $350,000 payment for the shares to the Lins, the Lins transferred most of it to K.C. Wong's personal account in Hong Kong. Within days K.C. Wong transferred those funds back to CN Investments' account in Antigua, and used it together with the balance of the original $500,000 to make the remaining two payments. K.C. Wong allowed the Lins to retain beneficial ownership of and control over the 160,000 shares that had been "sold" to KCC Group. K.C. Wong never took possession or control of the share certificate representing the 160,000 LaserSight shares issued in KCC Group's name. Rather, K.C. Wong allowed that share certificate to be sent directly from the transfer agent to Dr. Lin at LaserSight's offices in Florida. K.C. Wong then allowed the Lins to control the process of obtaining a legal opinion and using that legal opinion to have the restrictive Regulation S legend removed from the share certificate representing KCC Group's 160,000 shares. K.C. Wong had no dealings with the transfer agent or the attorney hired to write the legal opinion necessary for the removal of the legend. However, in connection with the removal of the restrictive legend, K.C. Wong had his business partner, Hsi Jung Wu, sign a representation letter on behalf of KCC Group even though Wu had no official position with KCC Group. That representation letter falsely stated that KCC Group bore no relationship to the Lins and that the transaction was not pre-arranged. After the restrictive legend was removed from the share certificate, K.C. Wong allowed the Lins to resell 122,500 of the shares in the name of KCC Group through accounts they had opened in KCC Group's name at various U.S. brokers. In particular, K.C. Wong authorized his sister, Yuchin Lin, to sign his name to documents pertaining to KCC Group during the resales. Finally, although the Lins ultimately reaped all of the resale proceeds, K.C. Wong executed banking transactions that created the illusion that he obtained the proceeds from those sales. Specifically, between February 23, 1994 and January 18, 1995 the Lins transferred a total of $767,852.56 of the resale proceeds to K.C. Wong. By April, 1996, K.C. Wong had transferred this entire amount back to the Lins. D.LEGAL DISCUSSION Sections 5(a) and 5(c) of the Securities Act make it unlawful to sell or offer to sell a security through the mails or means of interstate commerce unless a registration statement is on file or in effect or there is an applicable exception. SEC v. Continental Tobacco Co., 463 F.2d 137, 155 (5th Cir. 1972). The resales of the 122,500 LaserSight shares did not fall within the safe harbor provision of Regulation S or any other available exemption because the Lins' purported sale of the stock to KCC Group was a sham. Because the Lins controlled KCC Group through K.C. Wong, the stock never passed out of the Lins' control. K.C. Wong caused the Lins' violations of these provisions by allowing the Lins to control KCC Group, arrange the sham transaction, sign documents and open accounts in his name, and then resell the shares without registration. Section 17(a) of the Securities Act prohibits the employment of fraudulent devices in the offer or sale of securities, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit fraudulent schemes in connection with the purchase or sale of securities. The transfers of LaserSight funds to the Lins were material. Their nondisclosure in the company's periodic filings was part of a scheme to conceal those diversions from investors in LaserSight and others. K.C. Wong served as a conduit in the surreptitious transfers of LaserSight corporate funds to the Lins and in furtherance of that concealment. K.C. Wong knew that there was no legitimate corporate purpose for the cash transfers through his accounts. By nevertheless executing the transactions of forwarding the funds to the Lins' personal account, he caused violations of the anti-fraud provisions of the federal securities laws. IV. FINDINGS Based on the foregoing and the Offer of Settlement submitted by Kuo-chang Wong, the Commission finds that K.C. Wong caused violations of Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. IV. OFFER OF SETTLEMENT K.C Wong has submitted an Offer of Settlement in which, without admitting or denying the findings herein, he consents to the Commission's issuance of this Order, which makes findings, as set forth above, and orders K.C. Wong to cease and desist from committing or causing any violation or future violation of Sections 5(a), 5(c) and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. V. CEASE-AND-DESIST ORDER In view of the foregoing, it is in the public interest, and accordingly, IT IS HEREBY ORDERED THAT: 1.Pursuant to Section 8A of the Securities Act, K.C. Wong cease and desist from committing or causing any violation and any future violation of Sections 5(a), 5(c) and 17(a) of the Securities Act; 2.Pursuant to Section 21C of the Exchange Act, K.C. Wong cease and desist from committing or causing any violation and any future violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. By the Commission. ___________________ Jonathan G. Katz Secretary