Hong Kong Securities And Futures Commission Bans Vincent Ng Lok Kan For 30 months

The Securities and Futures Commission (SFC) has banned Mr Vincent Ng Lok Kan, a former licensed representative of Sun Hung Kai Investment Services Limited (SHKIS), from re-entering the industry for 30 months from 27 September 2019 to 26 March 2022 (Note 1).

The disciplinary action follows an SFC investigation which found that Ng, an account executive of SHKIS at the material time, placed a number of buy orders for a warrant through a client’s account on 27 February 2015, causing the price of the warrant to increase significantly.  Ng then immediately sold his entire personal holdings in the warrant to the client. In doing so, he made a profit of $14,510 while his client suffered a nominal loss of $13,040 (Note 2).

The SFC considers Ng’s conduct in ramping up the warrant’s price to facilitate the offloading of his personal holdings in the warrant for his own benefit and to the detriment of his client dishonest and unfair to the client.  Ng’s conduct was also unfair to other market participants because it interfered with the impartiality and objectivity of the normal price formation, and may have affected their trading strategy and investment decision in the warrant (Note 3).

The SFC also found that Ng effected transactions in the client’s account on a discretionary basis without obtaining the client’s prior written authorization, and without the knowledge and approval of SHKIS.  This prevented SHKIS from monitoring and supervising the operation of the account and, in turn, deprived the client of SHKIS’s protection in monitoring the discretionary trades conducted by Ng in his account (Notes 4 & 5).

In deciding the sanction against Ng, the SFC took into account all relevant circumstances, including the client’s financial loss resulting from Ng’s conduct, his relative inexperience in the industry at the time of his misconduct, and his otherwise clean disciplinary record. 

Notes:

1. Ng was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities and accredited to Sun Hung Kai Investment Services Limited and Sun Hung Kai Commodities Limited from 6 March 2014 to 11 October 2015.  Ng is currently not licensed by the SFC.
2. The warrant was JP-GEG@EC1504D and the underlying stock was Galaxy Entertainment Group Limited.  As a result of the buy orders placed by Ng on 27 February 2015, the price of the warrant increased over 76.5% from $0.017 to $0.03. 
3. General Principle 1 of the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct) provides that a licensed person should act honestly, fairly, and in the best interests of his clients and the integrity of the market in conducting his business activities.
4. General Principle 2 of the Code of Conduct provides that a licensed person should act with due skill, care and diligence, in the best interests of his clients and the integrity of the market in conducting his business activities.
5. Paragraph 7.1(a)(ii) of the Code of Conduct requires a licensed person to obtain a written authorization from a client before effecting transactions for a client without the client’s specific authorization.  Paragraph 7.1(c) of the Code of Conduct requires a licensed person who has received an authority described under paragraph 7.1(a)(ii) to designate such accounts as “discretionary accounts”.  Paragraph 7.1(d) of the Code of Conduct requires senior management to approve the opening of discretionary accounts.