The Securities and Futures Commission (SFC) has reprimanded and fined Impression Investment Limited (Impression) $2 million for failing to diligently supervise its staff and maintain effective internal controls over staff trading activities (Note 1).
The SFC has also prohibited Mr Liu Shan, a former director, responsible officer (RO) and manager-in-charge of Impression, from re-entering the industry for eight months from 2 April 2026 to 1 December 2026 (Notes 2 to 3).
The SFC’s investigation found that between January 2016 and March 2021, Liu and another staff member of Impression engaged in personal trading in a manner contrary to regulatory requirements when they were responsible for making investment decisions for funds managed by their employer (Note 4).
Notably, Liu:
- conducted over 2,500 personal transactions without obtaining prior written approval from Impression’s designated officer;
- traded in the same securities on the same day as the fund he managed over 200 times; sometimes at more favourable prices and sometimes at less favourable prices than the fund;
- participated in 12 initial public offerings (IPO) through his personal accounts, subscribing for the same IPO shares as the fund he managed; and
- failed to hold his personal investments for at least 30 days on 29 occasions.
The SFC was of the view that these personal trading activities breached both the Fund Manager Code of Conduct and Impression’s staff dealing policies. The actions of Liu and the other staff member also demonstrate their failure to identify, prevent or manage actual or potential conflicts of interest arising from these trading activities.
Against this background, the SFC found that Impression failed to diligently supervise its staff to ensure compliance with its staff dealing policies and other applicable regulatory requirements. The firm also did not maintain effective procedures and controls to monitor staff personal trading activities and detect irregularities. Although Impression had written staff dealing policies in place, they were neither implemented nor enforced prior to 2021.
The SFC considers that Impression’s failures were attributable to Liu’s neglect in discharging his duties as its RO and a member of its senior management.
In deciding the sanction, the SFC has taken into account all relevant circumstances, including:
- Impression’s failures enabled its staff to conduct personal trades in the same stock on the same day as the funds they managed and at more favourable prices in some instances, which could undermine investor trust and public confidence in the market;
- Impression has implemented regular post-trade monitoring of staff personal trades since 2021 as a remedial measure;
- there is no evidence that the personal trades conducted by Liu and the other staff member were intended to benefit themselves at the expense of the relevant funds; and
- Impression and Liu’s cooperation with the SFC in resolving the SFC’s concerns.
Notes:
- Impression is licensed under the Securities and Futures Ordinance to carry on Type 9 (asset management) regulated activity.
- Liu was accredited to Impression and approved to act as its RO from 30 April 2014 to 15 February 2024. Liu is currently not licensed by the SFC.
- Liu served as a director of Impression from 21 May 2013 to 29 February 2024. Further, he was Impression’s manager-in-charge of the following core functions: (i) Overall Management Oversight from 30 April 2014 to 15 February 2024; (ii) Compliance and Anti-money Laundering and Counter-terrorist Financing from 3 November 2017 to 11 January 2021; and (iii) Finance and Accounting and Key Business Line from 3 November 2017 to 15 February 2024.
- Please refer to the Statement of Disciplinary Action for the relevant regulatory requirements.
A copy of the Statement of Disciplinary Action is available on the SFC website
