Hong Kong's Securities And Futures Commission Bans Chan Chi Yuen For 18 Months

The Securities and Futures Commission (SFC) has banned Mr Chan Chi Yuen from re-entering the industry for 18 months from 9 October 2015 to 8 April 2017 (Note 1).

The disciplinary action follows Chan’s conviction in 2013 for illegal short selling (Notes 2 & 3).

The SFC found that Chan also concealed his beneficial interest and personal trades conducted in his wife’s account from the licensed corporation that he was accredited to, including his illegal short selling activities. In addition, he failed to disclose the accounts of his wife and two sisters maintained with the licensed corporation between 2008 and 2011. His conduct was in breach of the internal policy of the licensed corporation (Note 4).

As a result of Chan’s concealment, he was able to circumvent the licensed corporation’s monitoring of the trades conducted by him in his wife’s account, making it impossible for the licensed corporation to detect his illegal short selling activities.

The SFC concluded that Chan was guilty of misconduct, calling into question his fitness and properness as a licensed person.

In determining the penalty, the SFC took into account all the circumstances, including Chan’s conduct was dishonest and intentional, his guilty plea to illegal short selling and the resulting fine imposed on him.  

Notes:

1. Chan was a licensed representative to carry on Type 1 (Dealing in securities) and Type 2 (Dealing in futures contracts) regulated activities under the Securities and Futures Ordinance (SFO). Chan was accredited to Phillip Securities (Hong Kong) Limited and Phillip Commodities (HK) Limited since 11 March 2008 and 1 September 2008 respectively. His accreditation ceased on 18 May 2012 and is currently not a licensed representative or relevant individual under the SFO.
2. On 31 October 2013, Chan was convicted at the Eastern Magistrates’ Court of 26 counts of illegal short selling in the shares of Hutchison Whampoa Limited, China COSCO Holdings Company Limited and China Coal Energy Company Limited contrary to section 170 of the SFO. He was fined $57,200 and ordered to pay the SFC’s investigation costs. For details, please see SFC’s press release dated 31 October 2013.
3. The summonses laid against Chan at the Eastern Magistrates’ Court represent 26 specimen charges out of a total of 52 occasions of illegal short selling identified by the SFC.
4. Paragraph 12.2 of the Code of Conduct for Persons Licensed by or Registered with the SFC requires licensed corporations to implement procedures and policies on employee trading and to actively monitor the trading activities in their employees’ accounts and their related accounts.