The Securities and Futures Commission (SFC) has suspended Mr Chen Chi Hing for eight months from 26 September 2013 to 25 May 2014 (Note 1).
The disciplinary action follows an SFC investigation into Chen’s conduct which found that Chen was called by a client who said he wanted to “play around” with a particular stock because he noticed that a small bid order would have a substantial impact on the nominal price. The client then placed an order for 10,000 shares “to play around” (Note 2).
The order caused the price of the shares to increase by more than twofold. Although the share price quickly returned to the normal level, Chen should not have executed an order of this kind without asking the client questions to determine whether the client had a genuine purpose for buying the shares or whether the order was intended to create undue volatility in the stock.
The SFC also found that Chen failed to provide complete information on the reasons for the client’s order to his employer for its response to an enquiry from Hong Kong Exchanges and Clearing Limited.
As the SFC has stated on previous occasions, account executives must query their clients on suspicious orders. If the client’s explanation is not reasonable, account executives should refuse to execute the order and report the matter to the management of the licensed corporation, and to the SFC where appropriate (Note 3).
Notes:
- Chen was accredited to BOCI Securities Limited between 4 January 2006 and 12 April 2013 to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 3 (leveraged foreign exchange trading) regulated activities under the Securities and Futures Ordinance.
- The client is not in Hong Kong and his present location is unknown.
- Please refer to the April 2007 issue of the SFC Enforcement Reporter, and the SFC’s press releases dated 20 December 2007, 14 April 2009, 30 July 2009 and 21 December 2009.
- A copy of the Statement of Disciplinary Action in relation to the matter is available on the SFC website.
