.jpg)
The Securities and Futures Commission (SFC) has banned Ms Sui Yu from re-entering the industry for three months from 19 November 2013 to 18 February 2014 (Note 1).
An SFC investigation found that in September 2009, Sui sold 6,000 shares of a listed company after she was assigned to lead an execution team in a proposed placement of the company’s shares.
At the time Sui sold the 6,000 shares, she knew that a placement was being proposed but was not aware of any other details. While this was confidential, it was insufficiently specific or price-sensitive to constitute inside information.
When Sui sought pre-clearance from her employer as required before selling the shares, she failed to disclose that she had been assigned to lead the execution team in the proposed placement.
Sui’s employer placed the listed company on its “watch list” so it was able to prevent inappropriate or illegal staff trading. However, Sui’s pre-clearance form was submitted minutes before the listed company was added to the list.
The SFC considers that, by dealing in the shares of the listed company whilst in possession of confidential information about the proposed placement, Sui had put herself in a conflict of interest situation, in breach of the Code of Conduct. The SFC also considers that, by providing wrong information on the pre-clearance form to her employer, Sui had breached the Code of Conduct for failing to act with due skill, care and diligence, and in the best interests of clients (Note 2).
In deciding the penalty, the SFC took into account that:
- the amount of the trade involved was only $43,200;
- Sui self-reported the incident to her employer after the trade;
- Sui was dismissed by her employer as a result of the incident; and
- Sui has an otherwise clean disciplinary record.
Intermediaries are reminded that when communicating confidential information about listed companies to staff, where trading in shares of the relevant company by staff needs to be prohibited or monitored, it is prudent for details to be provided to relevant control room staff or for the company to be added to prohibited lists in advance.
Notes:
- At the relevant time, Sui was registered as a relevant individual with the Hong Kong Monetary Authority (HKMA) and was engaged by JPMorgan Chase Bank, N.A. and J.P. Morgan Securities (Asia Pacific) Ltd to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities. Sui is currently not licensed by the SFC or registered with the HKMA.
- General Principle 2 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission requires that a licensed or registered person should act with due skill, care and diligence, in the best interests of clients and the integrity of the market, and General Principle 6 requires that a licensed or registered person should try to avoid conflicts of interest.
- A copy of the Statement of Disciplinary Action in relation to the matter is available on the SFC website.
