Hong Kong Securities And Futures Commission Bans Christopher Tse For 12 Months

The Securities and Futures Commission (SFC) has banned Mr Christopher Tse, a former research analyst at RHB Securities Hong Kong Limited (RHBSHK), from re-entering the industry for 12 months from 31 January 2020 to 30 January 2021 (Note 1).

The SFC investigation found that Tse conducted trades through his father's securities trading account held at another brokerage between August 2013 and October 2015 without informing his then employer, RHBSHK, and traded in a stock on RHBSHK's restricted list on two occasions.

The evidence shows that some of the trades conducted by Tse through his father's account between November 2013 and July 2015 were: (a) in a manner contrary to his recommendations; and (b) in the shares of companies covered in some of his research reports within 30 days prior to or three days after the issue of the reports.  Moreover, Tse failed to disclose his financial interests in his father's account in relation to four companies in a number of research reports between September 2013 and June 2015.

By doing so, Tse not only breached RHBSHK's internal policies and the Code of Conduct, but also seriously compromised his role as a research analyst and called into question the objectivity of the research reports he prepared.  As such, the SFC is of the view that he is not a fit and proper person to be licensed (Notes 2 to 5).

In deciding on the disciplinary sanction, the SFC took into account all relevant circumstances, including:

• Tse's trading via his father’s account lasted for over two years;
• the necessity of a deterrent message to the industry that the SFC would not tolerate non-compliance by research analysts with relevant regulatory requirements; and
• Tse's otherwise clean disciplinary record.

Notes:

1. Tse was licensed under the Securities and Futures Ordinance to carry on Type 4 (advising on securities) regulated activity and was accredited to RHB Securities Hong Kong Limited between August 2013 and October 2015.  Tse is not currently licensed by the SFC.
2. Code of Conduct for Persons Licensed by or Registered with the SFC.
3. Paragraph 16.4(b) of the Code of Conduct provides that an analyst or his associate should not deal in or trade any securities in respect of an issuer that the analyst reviews: (i) in a manner contrary to his outstanding recommendation; or (ii) within 30 days prior to and 3 business days after the issue of investment research on the issuer, except in special circumstances outlined in the firm's policy and pre-approved by the relevant legal or compliance function.  Under paragraph 16.2(b) of the Code of Conduct, an "associate" include a person accustomed or obliged to act in accordance with the directions or instructions of the analyst and "financial interest" means any commonly known financial interest, such as investment in the securities of an issuer.
4. Paragraph 16.4(d) of the Code of Conduct provides that if an analyst or his associate has any financial interests in relation to an issuer or a new listing applicant that the analyst reviews, he should disclose that fact in the research report.
5. RHBSHK was reprimanded and fined by the SFC for its failures to comply with regulatory requirements on conflicts of interest and supervision of account executives.  Please refer to the SFC's press release dated 2 January 2020.