Hong Kong Securities And Futures Commission Bans Song Peng For 10 Months

The Securities and Futures Commission (SFC) has banned Mr Song Peng, a former account executive of Phillip Securities (Hong Kong) Limited (Phillip Securities), from re-entering the industry for 10 months from 12 July 2019 to 11 May 2020 for breach of the SFC’s Code of Conduct (Notes 1 to 3).

The SFC found that Song effected transactions in a client’s securities account and margin account between April 2015 and May 2016 on a discretionary basis without obtaining the client’s prior written authorization, nor with the knowledge and approval of his then employer.

Although the client had verbally authorized Song to trade in the accounts on a discretionary basis, the absence of a written authorization prevented Phillip Securities from monitoring and supervising the operation of the accounts, and deprived the client from protection against the risk of unauthorized trades carried out in his accounts.

In deciding the penalty, the SFC took into account all relevant circumstances, including the duration of Song’s misconduct and his otherwise clean disciplinary record.

Notes:

1. Song was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) regulated activity and accredited to Phillip Securities (Hong Kong) Limited from 4 February 2015 to 15 November 2016.  Song is currently not licensed by the SFC.
2. General Principle 2 of the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct) provides that a licensed person should act with due skill, care and diligence, in the best interests of its clients and the integrity of the market in conducting its business activities.
3. 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 the senior management to approve the opening of discretionary accounts.