Hong Kong's Securities And Futures Commission Reprimands And Fines SynerWealth Financial Limited $2.7 Million

The Securities and Futures Commission (SFC) has reprimanded SynerWealth Financial Limited (SynerWealth) and fined it $2.7 million for internal control failures relating to short selling orders and for failing to report the deficiencies of its trading system to the SFC in a timely manner as required under the SFC’s Code of Conduct (Notes 1 & 2).

The SFC’s investigation found that from November 2012 to January 2014, there were at least 65 instances of short sales executed by SynerWealth which resulted from its failure to put in place effective internal control procedures to detect and prevent short selling.

The SFC also found that SynerWealth identified deficiencies in its self-developed trading system as early as January 2013, but it failed to report the material errors or defects of the system to the SFC.  

In deciding the disciplinary sanction, the SFC took into account all relevant circumstances of the case, including that:

• adequate and effective internal control systems are fundamental to the fitness and properness of a licensed corporation;
• SynerWealth’s failures lasted for about 14 months; and
• SynerWealth had an otherwise clean disciplinary record. 

Notes:

1. SynerWealth is licensed under the Securities and Futures Ordinance (SFO) to carry on business in Type 1 (dealing in securities) regulated activity.
2. Under paragraph 12.5 of the Code of Conduct for Persons Licensed by or Registered with the SFC, a licensed or registered person is required to report to the SFC immediately on the happening of any material failure, error or defect in the operation or functioning of its trading, accounting, clearing or settlement systems or equipment.