The Securities & Futures Commission of Hong Kong fined Guotai Junan Securities (Hong Kong) Limited HK $1.3 million (US $130,000) for its failure to provide the SFC with the identities of the ultimate customers of an intermediary Korean omnibus broker for whom it processed transactions. Under SFC requirements, a licensed entity should provide ultimate client information to it or an HK exchange within two days of a request. Although the SFC does not mandate the manner by which licensed persons might comply with this requirement, it advises that one method “is by using an agreement whereby the licensed person’s client would agree to provide the details of the ultimate beneficiary and of the person originating the instruction for a transaction directly to [r]egulators on request.” HK licensed persons are required to refuse business from clients that “are not prepared” to provide the requisite client information within two days after a request. In the instant matter, on July 7, 2014, the SFC requested that Guotai provide ultimate client information for transactions involving a number of shares in an equity traded on the Stock Exchange of Hong Kong. On July 10, Guotai advised the SFC that the transactions were on behalf of a Korean broker acting for retail clients. Under its client agreement with Guotai, the Korean broker agreed to provide ultimate client information within two days and confirmed that its clients had waived any benefit of local law that might preclude it from complying with its agreement with Guotai. Notwithstanding, after not producing client identity information timely, the Korean broker advised Guotai it could not comply with the SFC’s request under Korean law without the clients’ written consent. The ultimate clients’ identification was finally provided to the SFC on January 12, 2015 – many months after the SFC's initial request. In the interim, Guotai continued to transact substantial business on behalf of the Korean broker. However, said the SFC, by August 1, Guotai should have reasonably realized its Korean broker client might not comply with its agreement to provide ultimate client identity within two days as required, and should have ceased conducting business with it. Accordingly, the SFC claimed that “Guotai[’s] conduct was deliberate” and its actions could have jeopardized the “integrity of the market.”