The Securities and Futures Commission (SFC) has banned Mr Leung Wai Hung from re-entering the industry for 18 months from 31 October 2014 to 30 April 2016 (Note 1).
The disciplinary action follows an SFC investigation which found that from February 2011 to August 2013, Leung failed to make proper records of the order instructions from his clients and circumvented the order recording requirements of his employer.
During that period, Leung executed orders for holders of seven accounts which were designated as discretionary accounts but which were never operated on a discretionary basis. All order instructions were in fact given by the clients by calling his mobile phone. However, Leung failed to make proper records of the order instructions. By designating the accounts as discretionary when they were not, Leung avoided the scrutiny of his employer on order recordings for those accounts.
The SFC has looked into the trading in these accounts and found no sign of any other misconduct. Nonetheless, the SFC considers Leung’s conduct calls into question his fitness and properness as a licensed person as Leung has not only failed to record and maintain proper audit trail of the orders placed by his clients, but also misused the discretionary account arrangement to circumvent the order recording requirements.
Keeping proper audit trail of client orders is a basic and fundamental requirement expected of licensed persons. Order instructions which are received from clients who have given discretionary authority to operate their accounts should be recorded in the same way as order instructions from other clients, in accordance with the Code of Conduct (Note 2).
Notes:
- Leung was licensed as a representative under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) regulated activities and was accredited to Fulbright Securities Limited between 14 June 2010 and 31 October 2013. He is currently not a licensed person.
- Paragraph 3.9 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
A copy of the Statement of Disciplinary Action is available on the SFC website