Hong Kong’s Securities And Futures Commission Revokes Licences Of Goodcape Securities Limited And Its Responsible Officers Tang Lin Sun And Chang Siu Ming

The Securities and Futures Commission (SFC) has revoked the licences of Goodcape Securities Limited (Goodcape) and its two responsible officers, Mr Tang Lin Sun and Mr Chang Siu Ming (Notes 1 & 2).

Tang and Chang have also been prohibited from re-entering the industry for life and three years from 15 December 2016 to 14 December 2019 respectively.

The disciplinary action followed SFC’s investigation which found that Goodcape, which was prohibited from holding client assets and was required to place all orders with an execution broker as part of its licensing conditions as an introducing broker, had deliberately failed to relay trading instructions from a large number of clients to an execution broker (Note 3). 

The trading instructions of these clients had been passed to Tang instead of the execution broker.  Clients also deposited funds into bank accounts controlled by Tang at the request of Chang and other Goodcape’s licensed representatives in the belief that the funds had been used to settle their securities transactions.

In order to conceal the deceptive scheme, bogus account statements had been issued to the clients while their deposited funds were withdrawn in cash or transferred to the personal bank account of Tang or his wife.  A sum of approximately $90.5 million had been withdrawn from these bank accounts by Tang.    

Chang, who failed to communicate order instructions of a number of Goodcape’s clients to the execution broker at Tang’s behest, had turned a blind eye to the deposit of funds by clients and connived in the issue of bogus statements.

The SFC is of the view that Goodcape, Tang and Chang are guilty of misconduct and are not fit and proper to remain licensed.  In deciding the penalty, the SFC took into account all relevant circumstances including that the misconduct was egregious and serious; the significant losses suffered by Goodcape’s clients and the need to remove Goodcape, Tang and Chang from the industry to protect the investing public.    

Notes:

1. Goodcape, Tang and Chang are licensed to carry on Type 1 (dealing in securities) regulated activity under the Securities and Futures Ordinance (SFO).
2. On 2 January 2015, the SFC issued a restriction notice pursuant to sections 204 and 205 of the SFO to prohibit Goodcape from carrying on, whether directly or through agents, all of the regulated activities for which it is licensed; disposing of or dealing with any relevant property in any manner; and assisting, counselling or procuring another person to dispose of or deal with any relevant property in any manner without the SFC’s prior written consent.  Please see our press release dated 2 January 2015.
3. Goodcape’s licence is subject to various conditions, including that it shall not hold client assets and conduct business other than communicating offers to effect dealings in securities to an execution broker, in the names of the persons from whom those offers are received; and introducing persons to two execution brokers, in order that such execution brokers may effect dealings in securities or make offers to deal in securities.