The Securities and Futures Commission (SFC) has reprimanded and fined Roofer Securities Limited (Roofer) $2.1 million for regulatory breaches relating to mishandling of client money (Note 1).
The SFC’s investigation, which followed a referral by The Hong Kong Exchanges and Clearing Limited (HKEX), found that between 8 February 2021 and 7 July 2022, there were 12 incidents where Roofer failed to maintain sufficient funds in its segregated client account. On one occasion, the shortfall in the client account amounted to $15.5 million.
These incidents arose as a result of Roofer using money from the client account to meet margin calls made or anticipated to be made by HKEX, its failure to properly manage its daily online bank transfer limit, and human error on the part of its staff.
The SFC is of the view that Roofer’s failures constitute breaches of the Client Money Rules and Code of Conduct (Notes 2 and 3) and decided on the disciplinary sanctions after taking into account all relevant circumstances, including:
- no client has suffered loss as a result of Roofer’s failures;
- Roofer has taken remedial actions, including enhancing its internal controls and processes and rectifying the under-segregation of client money shortly following each incident;
- Roofer’s cooperation with the SFC in resolving the SFC’s concerns; and
- Roofer has no previous disciplinary record.
Notes:
- Roofer has been licensed to carry on Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities under the Securities and Futures Ordinance since 30 November 2004 and 17 December 2020 respectively.
- Securities and Futures (Client Money) Rules and Code of Conduct for Persons Licensed by or Registered with the SFC.
- Details of the relevant regulatory requirements are set out in the Statement of Disciplinary Action.
A copy of the Statement of Disciplinary Action is available on the SFC website
