The Securities and Futures Commission (SFC) has banned Mr Li Tak Wa from re-entering the industry for 15 months from 18 June 2014 to 17 September 2015 (Note 1).
The disciplinary action follows an SFC investigation which found that Li:
- knowingly recorded incorrect information about a client in the client’s account opening forms;
- effected transactions in the client’s accounts on a discretionary basis without obtaining written authorization from the client; and
- conducted more than two day trades and opened short options positions in the client’s futures account without obtaining the client’s prior written approval specifically authorizing such trades.
Although there was evidence that the client verbally authorized Li to trade in her accounts on a discretionary basis, the absence of written authorization avoided monitoring and supervision by Li’s employer. Li also ignored the specific requirements in the Code of Conduct which required him to obtain the client’s prior written approval when conducting more than two day trades and opening short options positions in the client’s futures account, and deprived the client of an opportunity to make an informed decision before such transactions were conducted on her behalf. This was prejudicial to both Li’s employer and Li’s client (Note 2).
The SFC considers that Li’s conduct demonstrates a preparedness to ignore important safeguards and calls into question his fitness and properness to be a licensed person.
In deciding the penalty, the SFC took into account all relevant circumstances, including Li’s experience in the industry and his otherwise clean disciplinary record at the time of the misconduct.
Notes:
- Li was licensed as a representative under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities and was accredited to Kaiser Securities Limited and Kaiser Futures Limited between 12 March 2004 and 30 November 2012. Li is currently not licensed by the SFC.
- Paragraph 4 of Schedule 4 to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission provides that a licensed person should not accept, carry or initiate on behalf of a discretionary account more than two day trades in the futures market or open short options positions in a discretionary account, unless it has obtained from the client prior written approval specifically authorizing such transactions. For this purpose, a “day trade” is a transaction whereby a licensed person executes in the same day an order to buy and an order to sell futures or options contracts on the same market in the same futures contract month, option series or currency contract type for the same client.
- A copy of the Statement of Disciplinary Action in relation to the matter is available on the SFC website.
