The Securities and Futures Commission (SFC) has reprimanded and fined MIS Services Limited (formerly known as Standard Chartered Investment Services Limited) (SCIS) $3 million for its failure to comply with regulatory requirements under the SFC Code on MPF Products (MPF Code) and Fund Manager Code of Conduct (Notes 1 & 2).
An SFC investigation found that SCIS failed to ensure there were at least two key personnel who met the minimum investment experience of five years in managing retirement funds or public funds as required by the MPF Code for a period of over nine years from October 2000 to July 2015 (Note 3).
From September 2013 to July 2015, SCIS did not have any key personnel who met the minimum investment experience requirement. For a period of over seven years between October 2000 and September 2013, SCIS had only one key personnel who met the minimum investment experience requirement and, for the rest of the time, had two key personnel who met the minimum investment experience requirement. SCIS only discovered that the two staff members it had designated as key personnel from September 2013 to July 2015 did not meet the minimum investment experience requirements when informed by the SFC in July 2015.
SCIS failed to implement adequate policies and procedures for the operation and monitoring of the investment experience of key personnel. SCIS also failed to communicate to staff members of their designation as key personnel and advise them of the necessary investment experience required for the role (Notes 4 & 5).
In deciding the penalty, the SFC took into account that SCIS:
- co-operated with the SFC in resolving the SFC’s concerns;
- engaged an independent reviewer to conduct an internal controls review into the incident; and
- has since taken steps to strengthen its policies and procedures to ensure compliance with the minimum investment experience required for key personnel under the MPF Code.
- SCIS is licensed under the Securities and Futures Ordinance to carry on Type 9 (asset management) regulated activities. At all material times, SCIS was a wholly-owned subsidiary of Standard Chartered Bank (Hong Kong) Limited.
- On 10 November 2016, SCIS changed its name from Standard Chartered Investment Services Limited to its current name.
- Paragraph 6.6(a) of the SFC Code on MPF Products provides that the key personnel of the investment manager should possess at least five years investment experience managing pooled retirement funds or other public funds with reputable institutions. The expertise gained should be in the same type of investments as those for the pooled investment fund or constituent fund(s) of the MPF scheme seeking authorization.
- Paragraph 6.4 of the SFC Code on MPF Products provides that the investment manager must comply with the Fund Manager Code of Conduct issued by the Commission.
- Paragraph 1.2 of the Fund Manager Code of Conduct requires a fund manager to, among other things, maintain satisfactory internal controls and written compliance procedures which address all applicable regulatory requirements.
A copy of the Statement of Disciplinary Action is available on the SFC website
