Hong Kong's Securities And Futures Commission Bans Xu Tao For Four Months

The Securities and Futures Commission (SFC) has prohibited Mr Xu Tao, a former investment consultant of China International Capital Corporation Hong Kong Securities Limited (CICC), from re-entering the industry for four months from 11 October 2017 to 10 February 2018 (Note 1).

The SFC found that Xu used his mobile phone and WeChat messaging application to accept order instructions from 13 clients between February and August 2015, in breach of the SFC’s Code of Conduct and the internal policies and procedures of CICC (Note 2).

The SFC considers Xu’s breach of the Code of Conduct has called into question his reliability, reputation, and ability to carry out regulated activities competently, as well as his fitness and properness to be licensed.

Notes:

1. Xu was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 4 (advising on securities) regulated activities and accredited to CICC between September 2008 and October 2015.  Xu is currently not licensed by the SFC.
2. Paragraph 3.9(b) of the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct) provides that where order instructions are received from clients through the telephone, a licensed or registered person should use a telephone recording system to record the instructions and maintain telephone recordings as part of its records for at least six months.
   
   Paragraph 3.9 of the Code of Conduct further notes that the use of mobile phones for receiving client order instructions is strongly discouraged.  However, where orders are accepted by mobile phones, staff members should immediately call back to their licensed or registered person’s telephone recording system and record the time of receipt and the order details.  The use of other formats (e.g. in writing by hand) to record details of clients’ order instructions and time of receipt should only be used if the licensed or registered person’s telephone recording system cannot be accessed.