SFC reprimands and fines Sun Hung Kai Investment Services Ltd
On 12 October 2009, the SFC reprimanded Sun Hung Kai Investment Services Ltd (SHKIS) and imposed a fine of HK$4m for internal control failures that contributed to market misconduct.
Mr Edmond Chau Chin Hung (former responsible officer of SHKIS) and Ms Connie Cheung Sau Lin (former account executive of SHKIS) were found to be engaged in false trading and price rigging in respect of the shares of QPL International Holdings in 2003. Internal control failures at SHKIS were found to have contributed to such market misconduct because:
- despite policies to segregate proprietary trading and client trading, SHKIS gave Chau the authority to conduct both types of trading which enabled him to use information gathered from the client trading side to engage in unlawful activities in a proprietary account;
- despite its policy that proprietary and client trading functions should be separated, SHKIS allowed Chau and Cheung to place orders in the same dealing room; and
- SHKIS did not detect Chau and Cheung’s misconduct for five weeks until it was brought up by the SFC.
In reaching its decision, the SFC considered the following factors:
- Chau and Cheung acted without SHKIS’ sanction and were in breach of its internal policies;
- SHKIS did not profit from such misconduct and co-operated with the SFC by entering into a settlement resolution; and
- improvements have subsequently been made to SHKIS’ framework of controls and reporting.
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