The Securities and Futures Commission (SFC) has prohibited Mr Law Man Wai, a former licensed representative of Cinda International Securities Limited (CISL), from re-entering the industry for three years from 19 June 2025 to 18 June 2028 (Note 1).
The disciplinary action follows an SFC investigation which found that Law had used accounts belonging to his sister and a friend, maintained with CISL and another brokerage, to conduct personal trading.
Between March and September 2023, Law executed a total of 109 matched or wash trades in nine stocks in the accounts of his sister and friend, as well as his own personal account at CISL. Law carried out these trades to avoid forced liquidation due to potential margin calls, without regard for their potential impact on the trading price or volume of the relevant stocks (Note 2).
The SFC also found that Law intentionally concealed his beneficial interests and personal trades in those accounts, in violation of CISL’s staff dealing policy. He also confirmed executed trades with his sister and friend using CISL’s recorded telephone line and submitted order records to CISL signed by them, creating a false impression that the orders originated from them when this was not the case.
Furthermore, Law impersonated his friend to place order for his friend’s account at the other brokerage, leaving the firm unaware that Law was operating the account.
The SFC is of the view that Law’s conduct was dishonest and raised serious concerns about his fitness and properness to be licensed. In deciding the sanction, the SFC has taken into account that there is insufficient evidence that Law executed the wash and matched trades with manipulative intent and that Law has an otherwise clean disciplinary record.
Notes:
- Law was a licensed representative accredited to CISL to carry on Type 1 (dealing in securities) regulated activity under the Securities and Futures Ordinance from 26 March 2020 to 8 June 2024. He is currently not licensed by the SFC.
- A wash trade is a transaction that does not involve any change in beneficial ownership of the shares, i.e. a person buys from himself. Matched trades refer to transactions where a person offers to sell securities at a price that is substantially the same as the price at which he has made or proposes to make (or he knows an associate of his has made or proposes to make) an offer to buy substantially the same number of securities, and vice versa. Wash and matched trades can create a false or misleading appearance of trading activity, distorting the actual supply and demand of the shares in question.
A copy of the Statement of Disciplinary Action is available on the SFC website
