Hong Kong Securities And Futures Commission Reprimands And Fines Guosen Securities (HK) Brokerage Company, Limited $2.8 Million Over Regulatory Breaches

The Securities and Futures Commission (SFC) has reprimanded and fined Guosen Securities (HK) Brokerage Company, Limited (Guosen) $2.8 million for regulatory breaches in relation to the handling of client assets and the provision of client account statements (Note 1).

The SFC’s investigation found that between 1 January 2021 and 7 March 2021, Guosen relied on expired standing authority of 1,009 clients to obtain financial accommodation by repledging their securities collateral with a bank as collateral.

The SFC also found that from May 2020 to November 2020, Guosen had provided monthly statements with incomplete and incorrect information to 930 clients.

Guosen’s failures constitute breaches of the Securities and Futures (Client Securities) Rules (CSR), the Securities and Futures (Contract Notes, Statement of Account and Receipts) Rules (CNR) and the Code of Conduct (Notes 2 & 3).

In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including:

• Guosen’s remedial actions and self-reports to the SFC regarding its breaches of the CSR and the CNR;
• the abovementioned incidents appear to be isolated;
• there is no evidence of client loss as a result of Guosen’s regulatory breaches; and
• Guosen’s cooperation in resolving the SFC’s concerns and accepting the SFC’s findings and disciplinary action.

Notes:

1. Guosen is licensed under the Securities and Futures Ordinance to carry on business in Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities) and Type 5 (advising on futures contracts) regulated activities.
2. Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.