Hong Kong's Securities And Futures Commission: Court Convicts Sole Proprietor And Investment Portfolio Manager Of Unlicensed Asset Management

The Eastern Magistrates’ Court today convicted Fonia Kwok Lai Kwan of carrying on a business in asset management trading under the name of Finamics Capital Management (Finamics) and Lawrence Ho Man Chung of performing a regulated function in relation to the asset management of Finamics without licences from the Securities and Futures Commission (SFC) (Notes 1 to 3).

Kwok and Ho, who both pleaded guilty, were fined $5,000 and $4,000 respectively and ordered to pay the SFC’s investigation costs.

The court found that between June 2009 and January 2015, Finamics, an entity without SFC licence, solicited clients for its asset management services and managed clients’ portfolios of securities and futures and options contracts.  Kwok, who was the sole proprietor of Finamics, was responsible for recruiting most of the clients, whilst Ho managed the clients’ investment portfolios. 

The court also found that nine clients, who had agreed to let Finamics manage their portfolios, invested a sum of around $7,501,387 and suffered total losses of around $2,499,362 from their trading via Finamics.  Finamics, which charged the clients 40 per cent to 50 per cent of the net profits as commissions on a monthly basis, made a gain totalling around $946,514 from the trading. 

The SFC reminds investors to check the SFC’s Public Register of Licensed Persons and Registered Institution on the SFC website (www.sfc.hk) to ensure that firms and people who provide asset management services are properly licensed.

Notes:

1. Asset management is a type of regulated activity under the Securities and Futures Ordinance (SFO).  Under section 114(1)(a) of the SFO, it is an offence to carry on a business in a regulated activity without a licence from the SFC.
2. From 12 September 2006 to 16 February 2015, Kwok was a licensed representative of Altruist Financial Group Limited for Type 4 regulated activity, namely advising on securities.
3. It is an offence under section 114(3) of the SFO to perform a regulated function in relation to a regulated activity without a licence from the SFC.