The Securities and Futures Commission (SFC) has suspended Ms Jenny Chan Pik Ha for four months from 9 June 2014 to 8 October 2014 following the determination of the Securities and Futures Appeals Tribunal (SFAT) to uphold the SFC’s decision to suspend her licence but reducing the period of suspension from six months to four months (Notes 1 & 2).
An SFC investigation found that between June 2011 and October 2011, Chan, who was then an account executive of ICBC International Securities Limited (ICBCI Securities), had:
- failed to record and maintain proper audit trail of the orders placed by her clients, in that she did not keep any written and/or telephone records in relation to a number of orders placed by her clients, and some of her dealing tickets were either not time stamped or time stamped only after market close;
- accepted trade instructions from a third party who is the mother of three of her clients, without obtaining written authorization from these three clients as required by ICBCI Securities; and
- deposited $300,000 from her personal bank account to a client’s account to settle a trade and verified on ICBCI Securities’ internal documentation that the deposit was from the client’s own funds.
The SFC concluded that Chan’s conduct called into question her fitness and properness as a licensed person as Chan failed to comply with the order recording requirements, and failed to act with due skill, care and diligence in managing her clients’ accounts, in breach of the Code of Conduct (Note 3).
The SFAT’s ruling highlights that internal controls prescribed by licensed corporations, insofar as they seek to ensure competency and integrity in the manner in which employees carry out their dealing responsibilities, are not purely private guidelines between employers and employees, but constitute an integral part of the regulatory system that governs the securities industry. The SFAT accepted that a breach of such internal controls may be the subject of disciplinary action of a public nature, as the breach constitutes a failure to comply with the public principles-based regulations governing intermediaries imposed by the SFC (Note 4).
The SFAT reduced the suspension period imposed by the SFC from six months to four months, taking into account that Chan’s application for transfer of accreditation after she left ICBCI Securities was delayed for about four months while the SFC’s investigation into her conduct was pending (Note 5).
Notes:
- Chan is licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities and was accredited to ICBC International Securities Limited and ICBC International Futures Limited between 20 May 2011 and 20 October 2011. Chan is currently accredited to KGI Asia Limited and KGI Futures (Hong Kong) Limited.
- Please refer to the Reasons for Determination (Application No. 8 of 2013) which is available on the SFAT’s website (www.sfat.gov.hk).
- Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission
- Please see the SFAT’s Reasons for Determination, paragraphs 19 to 27.
- Please see the SFAT’s Reasons for Determination, paragraphs 65 to 70.
