2015 年8月份通讯
- 证监会谴责野村国际(香港)有限公司违反监管规定并处以罚款450万港元
- 法国巴黎证券(亚洲)有限公司因干犯与黑池有关的缺失而遭证监会罚款1,500万港元
- 上诉审裁处确认证监会因岑思慧犯有内部监控缺失而撤销核准其出任负责人员的资格的决定
- 证监会发表第一季度报告
- 证监会根据内幕交易者杜军的回复原状命令为投资者追回2,300万港元
1. 证监会谴责野村国际(香港)有限公司违反监管规定并处以罚款450万港元
在2015年7月30日, 证券及期货事务监察委员会(“证监会”)公开谴责野村国际(香港)有限公司(“野村香港”)并处以罚款450万港元,原因是其没有及时汇报一名前交易员(“X先生”)的重大失当行为。
背景资料
2013年6月11日,野村香港通知证监会,指从日本的野村证券株式会社(“野村日本”)借调的交易员X先生于2013年5月23日造成330万美元的交易亏损及于2013年6月5日被调回日本(“6月11日的汇报”)。
然而,证监会其后发现,野村香港在作出6月11日的汇报时已知道X先生承认曾在野村香港的风险管理系统内输入虚假记录以隐瞒他的交易的真实风险水平,及承认曾向野村香港提供虚假资料。但野村香港并无根据《证监会持牌人或注册人操守准则》(“《操守准则》”)的规定立即向证监会披露该等事宜。
证监会亦发现,在X先生因借调至野村香港的安排被终止而离港之前,野村香港已察觉到他的实际交易活动与他向管理层提供的资料从表面看有一些不符之处。在证监会接获适当通知及野村香港完成其就X先生的行为进行的内部调查之前,X先生已被调回野村日本。
证监会进一步发现,于2013年6月19日或之前,野村香港已就其对X先生的交易活动进行的调查编制了初步报告草拟本。报告草拟本载列了多项初步调查结果,包括X先生曾就他的交易活动向管理层作出若干失实陈述;及X 先生曾在野村香港的风险管理系统内进行人手调整,以减低他的即日风险及盈亏,但并无合理理由支持他作出该等调整。在证监会于2013年7月10日就野村香港检视X先生的交易的结果作进一步查询之前,野村香港并无向证监会提供初步报告草拟本或其后的草拟本或当中所载的资料。野村香港在其于2013年7月17日给予证监会回应时,才首次通知证监会X先生曾作出不当行为。野村香港最终于2013年7月19日向证监会提供初步报告。
纪律处分行动
在此情况下,证监会认为,野村香港在向证监会作出 6 月 11 日的汇报中遗漏了极为相关的资料,并仅在催促下才作出适当汇报。因此,野村香港作为持牌人的适当人选资格受到质疑。野村香港解释,其需要完成就X先生的行为进行的调查,才可敲定其报告及釐定是否须要向证监会汇报此事。证监会并不接受,因此举有违《操守准则》第12.5段所确立,一旦发现失当行为或涉嫌失当行为,应立即作出汇报的职责。
证监会在决定对野村香港採取纪律处分行动时,已考虑到所有相关情况,包括证监会在过往发表的声明中已强调中介人有责任立即向证监会汇报不当行为,以及野村香港在证监会进行调查期间表现合作。
证监会法规执行部执行董事施卫民先生(Mr Mark Steward)表示:“对于需要证监会即时关注的事宜,没有任何情况能成为延迟汇报的借口。这些延迟汇报的行为会助长失当行为,并会影响调查工作。中介人必须立即向证监会汇报问题,而不是在完成内部调查或取得法律意见后才作出汇报,并且不能遗漏任何重要资料。”
分析
根据《证券及期货条例》(“该条例”)第194条,在某受规管人士(包括持牌人及某持牌法团的负责人员)犯失当行为,或按证监会的意见,某受规管人士并非担任或留任同一类受规管人士的适当人选的情况下,证监会有权对该受规管人士採取纪律行动。该受规管人士最高可被罚款$10,000,000港元或该受规管人士因失当行为获取的利润金额或避免的损失金额的3倍(以金额较大者为准)。
《操守准则》第12.5段规定,如持牌法团本身或其僱用或委任以替客户或其他持牌人进行业务的人士严重地违反、触犯或不遵守任何法例、证监会执行或发出的规则、规例及守则,或怀疑有任何该等违反、触犯或不遵守事宜发生,持牌法团应立即向证监会作出汇报。
此外,该条例第129条规定,证监会在考虑某人是否获发牌的适当人选时,除考虑其认为有关的任何事宜外,亦可考虑有关人士是否有能力称职地、诚实地而公正地进行有关的受规管活动。
是次纪律行动突显出不延误地向证监会报告不当或可疑行为的重要性。持牌法团,尤其是中介人应注意不遵守此责任可能会导致巨额罚款和声誉受损。
2. 法国巴黎证券(亚洲)有限公司因干犯与黑池有关的缺失而遭证监会罚款1,500万港元
在2015年8月3日,证券及期货事务监察委员会(“证监会”)因法国巴黎证券(亚洲)有限公司(“法国巴黎证券亚洲”)在其黑池交易服务方面干犯的缺失对其罚款1,500万港元。
背景资料
是项纪律处分行动源于证监会对法国巴黎证券亚洲名为BNP Internal Exchange(BIX)的黑池交易服务展开的调查。证监会按照一份依据《证券及期货条例》(“该条例”)第 201 条而订立的协议採取上述纪律处分行动。第201条允许证监会在有关人士的同意下,不需经过该条例所列明的正式聆讯程序而解决纪律处分行动。
未能确保 BIX 按照预期的方式运作
法国巴黎证券亚洲于其向证监会提出的第 7 类受规管活动牌照申请内所载的业务计划(“业务计划”)中表示,BIX 内的买卖指示将会按照买卖盘价格的优先次序对盘及执行。例如价格较高的买盘将会比价格较低的买盘享有更高的优先次序。该公司亦向其客户作出相同陈述。
实际上,于2009年11月至2011年4月期间,BIX并没有优先处理价格较高的买盘指示,而只是按数量比例作出分配,犹如所有买卖指示都有着相同的优先次序。这对每组具有两个或以上不同价格的买卖指示的BIX竞价构成潜在影响,并确实曾令到部分BIX竞价受到影响。
根据《证券及期货事务监察委员会持牌人或注册人操守准则》(“《操守准则》”)第2条一般原则,法国巴黎证券亚洲于进行其受规管活动业务时应以适当的技能、小心审慎和勤勉尽责的态度行事,以维护其客户的最佳利益。法国巴黎证券亚洲作出的实际操作与其向客户所作出的陈述不一,因而违反此原则。尤其是,部分向 BIX 发出较佳价格的买卖指示,并相信该等指示会在执行上享有较高优先次序的客户因而受到影响。
没有就 BIX 服务中断作出汇报
法国巴黎证券亚洲于发现买卖指示并非按照买卖盘价格的优先次序对盘后,在2011年4月暂停BIX服务。BIX服务于七个月后才完全恢复,而法国巴黎证券亚洲于事隔21个月后在2013年1月才通知证监会该项服务曾遭暂停。
就法国巴黎证券亚洲的第 7 类受规管活动所施加的发牌条件中,其中一项是法国巴黎证券亚洲必须在 BIX 的运作出现影响其用户的重大服务故障或中断事件的情况下,将有关事件通知证监会。法国巴黎证券亚洲没有及时就服务暂停一事向证监会汇报违反了此项发牌条件。
没有就业务计划的重大改变通知证监会
法国巴黎证券亚洲在申请提供自动化交易服务牌照的业务计划中订明,会于取得客户同意后才把他们的买卖指示发送至BIX进行对盘。然而,拟于香港联合交易所执行的客户买卖指示在法国巴黎证券亚洲未征得客户明确同意的情况下,便已于BIX自动获得执行。法国巴黎证券亚洲并未按规定知会证监会其业务计划的变动。
根据《操守准则》第7條一般原則及第12.1段,法国巴黎证券亚洲有责任遵守所有适用的法例及规例。《证券及期货(发牌及注册)(资料)规则》(“《发牌资料规则》”)第4条规定,凡持牌法团就发牌申请向证监会提供的业务计划出现重大改变,便须在发生改变后七个营业日内向证监会发出书面通知。法国巴黎证券亚洲没有在時限內向证监会发出通知,违反了《发牌资料规则》及《操守准则》。
没有就 BIX 备存足够的交易纪录及以文件载明 BIX
法国巴黎证券亚洲没有就 BIX 备存足够的交易纪录及以条理清楚的文件载明对盘逻辑。因此,证监会难以计算法国巴黎证券亚洲未能实施预期的对盘逻辑所带来的确切影响。
证监会认为以条理清楚的文件载明 BIX 的对盘逻辑,对于了解 BIX 如何运作及 BIX 的运作透明度亦非常重要。客户有权知道 BIX 如何运作,从而让他们能够就使用服务与否作出有根据的决定。
宽减因素
证监会在厘定纪律处分行动时,已考虑到:
– 法国巴黎证券亚洲在与证监会合作解决证监会提出的关注事项的过程中表现合作;
– 自2012年起,法国巴黎证券亚洲已于取得客户同意后,才容许他们的买卖指示于BIX中进行对盘;
– 法国巴黎证券亚洲已于2011年采取措施纠正BIX的对盘逻辑;
– 法国巴黎证券亚洲同意委聘独立的检讨机构就BIX的运作进行前瞻性的检讨;及
– 法国巴黎证券亚洲过往并无就其第7类受规管活动的业务遭受纪律处分。
分析
近年,使用黑池(又稱“另類交易平台”或“ALP”)进行交易的数字有上升的趋势。黑池交易服务供应商及营运商必须提供足够的资讯给客户,使他们明白其订单如何执行。证监会法规执行部执行董事施卫民先生(Mr Mark Steward)在总结此纪律处分行动时表示∶“营运商必须就黑池的运作制订清晰的规则及程序,而同样重要的是,他们的运作应该与向客户作出的陈述贯彻一致,从而让客户可在清晰和掌握充分资料的情况下同意进行黑池交易。”
证监会于早月宣布加强另类交易平台监管制度将于2015年12月1日生效。其中,所有个人投资者(包括个人专业投资者及其全资拥有并用作持有投资的公司)均不可使用另类交易平台。
证监会牌照申请人必须确保他们在提交予证监会的业务计划所提供的资讯为真实及准确。根据《证券及期货条例》(“该条例”)第 201 条第 1节:「任何人 - (a) 作出在要项上属虚假或具误导性的陈述(不论该陈述属书面或口头或其他形式),以支持该人或其他人根据或依据本条例任何条文向证监会提出的申请;且 (b) 知道该陈述在要项上属虚假或具误导性,或罔顾该陈述是否在要项上属虚假或具误导性,即属犯罪」。此罪行的最高刑罚为罚款1百万港元及监禁两年。
3. 上诉审裁处确认证监会因岑思慧犯有内部监控缺失而撤销核准其出任负责人员的资格的决定
在2015年8月13日,证券及期货事务上诉审裁处(“上诉审裁处”)裁定岑思慧(“岑”)涉及中国平安证券(香港)有限公司(“平安”)在2010年8月至2011月4月期间(“有关期间”)的严重内部监控缺失,并确认证券及期货事务监察委员会(“证监会”)撤销核准其出任负责人员的资格的决定。
背景资料
岑在2010年8月至2011月4月期间作为平安的两个负责人员之一,负责平安的合规职能。在2015年1月25日,证监会发出公告裁定岑没有发现及跟进平安母公司的行政总裁及平安的3名客户之间的可疑交易。与此同时,岑亦没有为平安制定反洗钱的内部指引及没有对平安的员工进行反洗钱的训练。
证监会在调查后发现岑在有关第三方付款(3PPs)的事宜上没有依照合适的程序。另外,岑亦没有在有关僱员处理及开户问题上作出沟通及执行平安的内部指引。岑似乎对合规重要性的意识较低,而且在有关期间内大致上没有执行合规职能。
有鉴于以上所列的内部缺失,证监会撤销核准岑出任负责人员的资格的决定。在其向上诉审裁处所作出的上诉申请中,岑并没有挑战证监会对其作出有所缺失并须承担责任的裁决。岑挑战的是相关纪律处分的适当性。
上诉审裁处的裁决
上诉审裁处注意到岑作为负责人员的缺失在整体上是严重及持续的。在此案件中,证监会十分关注平安在有关期间内并没有任何反洗钱指引。上诉审裁处指出洗钱在世界各地的政府、银行及财务机构均属受高度关注的范畴。
上诉审裁处强调持牌机构的负责人员应负上遵从所有适用的监管标准的主要责任。在此案件中,岑在设立及履行有效内部监管上的缺失十分严重。其缺失威胁到香港金融市场的诚信及声誉。故其没有违反诚信责任以及其客户没有受到损失亦只能作为比重很少的宽减因素。
上诉审裁处认为撤销核准岑出任负责人员的资格的决定是合适的。此撤销决定只针对岑作为负责人员的身份。岑依然能根据《证券及期货条例》(“该条例”)第120条在金融业界中担任重要性较低的职位如持牌代表等。
分析
本案关注基金负责人在现行监管法例下的适当位置和职责,其中《操守准则》内的第2条一般原则和第9条一般原则最为重要。第2条一般原则规定持牌人应以适当的技能、小心审慎和勤勉尽责的态度行事,以维护客户的最佳利益及确保市场廉洁稳健。 第9条一般原则规定高级管理人员须承担的首要责任是确保机构能够维持适当的操守标准及遵守恰当的程序。
《操守准则》第1.3段指出,在考虑负责人员的行为时,证监会将考虑他们在公司内所负责的职务 。第4.2段亦规定,持牌人应勤勉尽责地监督获其雇用或委任以代表其经营业务的人士。而第14.1段则规定高级管理人员应定期评核风险管理程序。
持牌机构应就着鑑定及报告可疑交易维持合适的系统及监管。首先需要的是对客户的业务及财政状况有足够的认识(可从客户尽职审查及及持续监督所得)以發現任何不尋常的交易。持牌机构亦应设立内部报告机制,而且负责合规的人员应作为中间人向联合财富情报组作出报告。与此同时,打击洗钱及恐怖分子资金筹集指引第7.21段也列明合规主任在报告可疑交易的事宜上应担任主要的角色。
在2015年8月17日,证券及期货事务监察委员会(“证监会”)发表《季度报告》,概述2015年4月至6月期间的重要发展。
《季度报告》阐述证监会的规管工作重点,包括证监会就加强及划一施加于另类交易平台营运商的监管责任的建议,以及修订《证券及期货条例》以让证监会向香港以外地方的规管者提供监管协助的建议,分别发表了谘询总结。为实施新的场外衍生工具制度,经修订的《证券及期货(场外衍生工具交易 ─ 汇报及备存纪录责任)规则》亦已于2015年5月在宪报刊登。
此外,证监会就基金互认安排与中国证券监督管理委员会签署监管合作备忘录,让内地及香港的合资格基金直接在对方的市场上出售。
在执法事宜上,证监会对干犯市场失当行为的两家公司及七名人士作出检控,并对八名持牌人采取纪律处分。证监会亦解决了针对Descartes Athena Fund SPC的法律程序,为约340名海外投资者追回一个已倒闭私人对冲基金的1.91亿港元资产。
报告中亦提及证监会在今季收到1805宗牌照申请,较去年同期上升15.1%。
完整《季度报告》载于证监会网站的〈资料库〉>〈机构刊物〉>〈季度报告〉一栏,网址为:
http://www.sfc.hk/web/EN/files/ER/Reports/QR/201504-06/Chi/00_final.pdf
5. 证监会根据内幕交易者杜军的回复原状命令为投资者追回2,300万港元
法庭委任管理人(李约翰企业管理咨询有限公司的李约翰先生(Mr. John Lees)及吴宓先生)已完成向所有297名(当中3人除外)曾与被定罪的内幕交易者杜军进行交易的对手方发放杜军根据回复原状命令而须支付的款项。
背景资料
摩根士丹利亚洲有限公司前董事总经理杜军此前被裁定就有关中信资源控股有限公司(中信资源)的股份进行内幕交易。根据高等法院颁布的回复原状命令,杜军须向名297投资者支付2,390万港元。
截至2015年8月18日,已经支付的款项共23,086,314港元。证券及期货事务监察委员会(“证监会”)及管理人已采取所有可行方法联络其余三名投资者,但不成功。余下而应支付予其余三名投资者的813,686港元的款项经法庭批准后已退回给杜军。
中国证券监督管理委员会、美国证券交易委员会、泰国证券及交易事务监察委员会及管理人亦在此事上协助证监会查找有关的海外投资者。
分析
回复原状命令并不是赔偿命令,其目的是使内幕交易者在财政上对与他们进行交易的对手方负责,并在财务上,令那些对手方回复至他们在交易前的状况。有关金额相等于受影响投资者出售中信资源股份予杜军的实际价格,与投资者在假设市场已得知有关中信资源的股价敏感资料的情况下本可出售股份的价格之间的差额。
证监会已公开地清楚列明其与内幕交易相关的执法理念:「内幕交易会导致市场运作不公正、破坏运作秩序,并损害市场信心。我们采取一切法律措施来打击内幕交易,包括检控内幕交易人士,或将个案转介至市场失当行为审裁处,以施加刑事或民事处分。我们亦会向法院寻求命令,以冻结内幕交易者的收益,并对失当行为造成的破坏采取补救措施。」
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Newsletter – July 2015
- Takeovers Panel sanctions Chow Yei Ching, Oscar Chow Vee Tsung and Joseph Leung Wing Kong for breach of Takeovers Code
- SFAT affirms SFC decision to reprimand and fine The Pride Fund Management Limited for failing to enter into mediation managed by the Financial Dispute Resolution Centre
- SFC suspends Tai Nga Chun for operating secret account
- SFC bans Laura Kiang Mang Yi for three years for misconduct
- SFC proposes changes to financial resources rules
- Fund management business reached record high in 2014
- EY’s appeal over audit working papers discontinued
- SFC commences MMT proceedings against AcrossAsia Limited, its Chairman and CEO for late disclosure of inside information
1. Takeovers Panel sanctions Chow Yei Ching, Oscar Chow Vee Tsung and Joseph Leung Wing Kong for breach of Takeovers Code
On 2 July 2015, The Takeovers and Mergers Panel (“Takeovers Panel”) imposed Cold Shoulder Orders against Mr Chow Yei Ching (“Mr Chow Y.C.”), Mr Oscar Chow Vee Tsung (“Mr Oscar Chow”) and Mr Joseph Leung Wing Kong (“Mr Leung”) and publicly censured them for breach of the Code on Takeovers and Mergers and Share Repurchases (“Takeovers Code”).
Background
On 20 November 2013, the Securities and Futures Commission (“SFC”) Takeovers Executive commenced disciplinary proceedings before the Takeovers Panel against Mr Chow Y.C., Mr Oscar Chow and Mr Leung over a serious breach of the Takeovers Code. The SFC’s allegations were that the three actively co-operated to assist the late Ms Nina Kung (“Ms Kung”) to obtain or consolidate control of ENM Holdings Limited (“ENM”) and avoid the triggering of a mandatory general offer under the Takeovers Code. At the relevant time, Ms Kung was the largest shareholder of ENM. She was also the chairwoman and the sole beneficial owner of the Chinachem Group.
Between 2000 and 2002, Mr Chow Y.C. acquired a total of 160 million shares of ENM (approximately 9.69% of ENM’s issued share capital) on Ms Kung’s behalf and at her request. Mr Chow Y.C. paid for the purchase of the ENM shares and was subsequently reimbursed by Ms Kung. The reimbursement was handled by Mr Oscar Chow and Mr Leung. Mr Chow Y.C. held the ENM shares under four British Virgin Island (“BVI”) companies he owned through the issuance of bearer shares until December 2009. To comply with the changes to BVI law requiring greater transparency in the ownership of bearer shares, Mr Chow Y.C. arranged for the ownership of the 160 million ENM shares to be split equally between one of his daughters and Mr Oscar Chow in December 2009.
The Takeovers Code treats persons acting in concert as being the equivalent of a single person and aggregates their shareholdings. Therefore, Mr Chow Y.C.’s acquisitions increased the collective shareholding of the concert group in ENM from 34.64% to 44.33%, thus triggering a mandatory general offer obligation under the Takeovers Code. However, none of the share acquisitions in ENM by Mr Chow Y.C. on Ms Kung’s behalf were publicly disclosed and remained undisclosed for a protracted period. This “warehousing” arrangement enabled Ms Kung to secretly hold the ENM shares and avoid an obligation under the Takeovers Code to make a general offer. As a result, ENM shareholders were deprived of their fundamental right to receive a general offer to buy their shares. Mr Chow Y.C. brought the matter to the SFC’s attention after receiving a letter in late April 2012 from the joint administrators of Ms Kung’s estate making enquiries about shares of ENM that belonged to the estate.
The Cold Shoulder Order
The Cold Shoulder Order against Mr Chow Y.C. denies him direct or indirect access to the securities markets for 10 years from 2 July 2015 to 1 July 2025. Mr Oscar Chow and Mr Leung are denied direct or indirect access to the securities markets for two years from 2 July 2015 to 1 July 2017. The Takeovers Panel published its written decision on 16 April 2015 setting out the reasons for finding them in breach of the abovementioned mandatory offer requirement under the Takeovers Code when they acted in concert with Ms Kung to obtain and consolidate control over ENM Holdings Ltd through the acquisition of voting rights and failed to make the required general offer.
Comment
Rule 26 is the overriding rule in the Takeovers Code and provides the circumstances in which a mandatory general offer must be made. This reflects General Principle 1 of the Takeovers Code and underpins the requirement for equal treatment of shareholders. Failure to make an offer that is required to be made under Rule 26.1 constitutes a serious breach of the Takeovers Code.
Pursuant to Rule 26.1, which came into force in December 2000, a mandatory general offer is required to be made for all the shares in the company if a person or group of persons acting in concert acquired shares resulting in either:
- the person or concert group collectively holding 35% or more of the voting rights (known as the “trigger”). The trigger threshold was reduced to 30% on 19 October 2001; or
- the person or concert group collectively holding between 35% and 50% of the shares and then going on to acquire, either individually or as a group, more than 5% in any 12 month period (known as the “creeper”). The creeper threshold was reduced to 2% on 19 October 2001.
In particular, the Takeovers Code defines persons acting in concert as comprising persons who, pursuant to an agreement or understanding, actively co-operate to obtain or consolidate control of a company through the acquisition by them of voting rights of the company.
For details, please refer to:
http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=15PR70
2. SFAT affirms SFC decision to reprimand and fine The Pride Fund Management Limited for failing to enter into mediation managed by the Financial Dispute Resolution Centre
On 2 July 2015, the SFC reprimanded and fined The Pride Fund Management Limited (“Pride Fund Management”) HK$400,000 over its failure to enter into mediation with an eligible claimant under the Financial Dispute Resolution Scheme (“FDRS”) administered by the Financial Dispute Resolution Centre (“FDRC”).
Background
The above disciplinary action follows a review of the SFC’s decision to sanction Pride Fund Management by the Securities and Futures Appeals Tribunal (“SFAT”). This is the first time the SFC has enforced obligations of intermediaries to comply with the FDRS under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (“Code of Conduct”).
The FDRS, which is administered by the FDRC, is an important part of Hong Kong’s regulatory framework under which banks and brokers are obliged to enter into mediation and potentially arbitration proceedings to resolve certain financial disputes with clients or persons who have been provided with financial services. The SFC states that Pride Fund Management refused to mediate a dispute with an eligible claimant despite requests by FDRC staff, even after FDRC issued a Notice of Non-Compliance to Pride Fund Management in June 2013. It was only after the SFC commenced disciplinary proceedings against Pride Fund Management that it eventually agreed to enter into mediation with the claimant.
Pride Fund Management claimed it had not understood that it was required to comply with the FDRS. However, the Hon Mr Justice Hartmann NPJ, Chairman of the SFAT, who upheld the SFC’s decision but varied the fine from HK$700,000 to HK$400,000, found that Pride Fund Management’s non-compliance was deliberate and that although the obligations under the FDRS may not be generally understood, after consideration of the SFAT’s reasons in this case and public reprimand, there can be no further excuse “on the part of members of the financial industry for a lack of understanding, at least, of the scheme’s basic architecture”. The Hon Mr Justice Hartmann also warned that “sterner penalties can be expected in the future”.
Comment
The FDRC was set up in November 2011 to administer the FDRS, an independent financial dispute resolution scheme which requires financial institutions who are its members to resolve monetary disputes with their customers through mediation and, failing which, arbitration. Other than firms which carry on Type 10 (providing credit rating services) regulated activity under the SFO, financial institutions or financial service providers authorized by the Hong Kong Monetary Authority or licensed by the SFC are to be members of the FDRS. In particular, the FDRC facilitates the resolution of monetary disputes between individual customers and financial institutions in Hong Kong.
The SFC takes non-compliance with the FDRS seriously and has stated that it will continue to take action against SFC-licensed intermediaries who fail to comply with the scheme. Specifically, paragraph 12A of the Code of Conduct requires a licensed person to comply with the FDRS for managing and resolving disputes administered by the FDRC in full and be bound by the dispute resolution processes provided for under the FDRS. Paragraph 12.6 of the Code of Conduct further requires a licensed person to render all reasonable assistance to the FDRS.
For further information, please refer to the Reasons of Determination issued by the SFAT:
http://www.sfat.gov.hk/english/determination/AN-2-2015-Determination.pdf
For details, please refer to:
http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=15PR71
3. SFC suspends Tai Nga Chun for operating secret account
On 13 July 2015, the SFC suspended Ms Tai Nga Chun (“Ms Tai”) for eight months from 10 July 2015 to 9 March 2016.
Background
The disciplinary action follows an SFC investigation which found that from January to June 2013, Ms Tai operated a secret account and conducted 85 personal trading activities through the account, in breach of her employer’s internal control policies with regard to employee dealings. At the time, Ms Tai was employed by Kingston Corporate Finance Limited.
The SFC considers Ms Tai’s conduct was dishonest and made it impossible for her employer to identify and monitor her trading activities, without which licensed corporations would not be able to detect potential malpractices arising from staff trading.
The SFC looked into the trading in Ms Tai’s account and found no sign of any other misconduct. The SFC has therefore reduced the period of suspension taking into account that Tai has expressed remorse for her misconduct.
Licensed persons are required to follow the employee dealing procedures implemented by their employers in accordance with the Code of Conduct, because such controls are not purely internal to their employers but constitute an integral part of the regulatory system, as they seek to ensure integrity in the manner in which employees conduct personal trading.
Comment
Pursuant to Paragraph 12.2 of the Code of Conduct, a licensed or registered person must have a written policy issued to employees specifying whether or not they can deal or trade for their own accounts in securities or futures contracts. If employees are permitted to deal or trade, the policy should specify the following matters:
- the conditions on which employees may do so;
- that employees should identify all related accounts and report them to senior management (“related accounts” refers to accounts of minor children and all accounts in which employees have a beneficial interest.);
- that employees should generally be required to deal through the licensed or registered person or its affiliates;
- that if employees are allowed to deal in securities and/or futures contracts on a recognized stock or futures market respectively or in their derivatives, through other licensed or registered persons, the licensed or registered person (principal) and the employees should arrange for duplicate trade confirmations and statements of account to be provided to the senior management of the licensed or registered person (principal);
- that any transactions covered by this section should be separately recorded and identified in the licensed or registered person’s records;
- that transactions on employees’ and related accounts should be reported to and actively monitored by senior management, who should ensure that there are no irregularities and that the transactions are not prejudicial to the interests of clients; and
- that a licensed or registered person should not knowingly have another licensed or registered person’s employee as a client without the written consent of that employee’s principal.
If the employee breaches his/her employer’s policies issued under Paragraph 12.2 of the Code of Conduct, this may reflect negatively on his/her fitness and properness to remain licensed. This could lead to suspensions or revocations of licenses.
For further details, please refer to:
http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=15PR74
4. SFC bans Laura Kiang Mang Yi for three years for misconduct
On 13 July 2015, the SFC banned Ms Laura Kiang Mang Yi (“Ms Kiang”) from re-entering the industry for three years from 13 July 2015 to 12 July 2018.
Background
Ms Kiang joined Bank Julius Baer & Co. Ltd (“BJB”) in July 2013 and represented to her employer that she had obtained a master’s degree from New York University (“NYU”) in 2008. In fact, she had only studied at the University but did not complete all the requirements to be awarded a master degree.When asked to provide evidence to support her academic qualification, rather than telling the truth, Ms Kiang obtained a fake diploma purporting to have been issued by NYU and submitted it to BJB.
Ms Kiang knowingly made a false representation to her former employer about her academic qualification and her misconduct was aggravated by the manufacture of the fake diploma.
The SFC considers Ms Kiang’s conduct called into question her fitness and properness to be a regulated person.
Comment
Pursuant to General Principle 1 of the Code of Conduct, A licensed or registered person “should act honestly, fairly and in the best interests of its clients and the integrity of the market”. As Ms Kiang’s behaviour is not acting honestly and fairly, it reflects adversely on her fitness and properness to remain as a regulated person.
For further details, please refer to:
http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=15PR75
5. SFC proposes changes to financial resources rules
On 17 July 2015, the SFC released a consultation paper on proposed changes to the Securities and Futures (Financial Resources) Rules (“FRR”) relating to capital and other prudential requirements for licensed corporations engaged in over-the-counter derivatives activity. The consultation paper also proposes certain changes to non-over-the-counter derivatives-related FRR requirements. The three-month consultation ends on 16 October 2015.
Background
The proposals aim to ensure that licensed corporations maintain their capital and liquidity at levels which are commensurate with the risks they undertake pertaining to derivative businesses as well as to encourage them to adopt more advanced risk management standards. The proposed FRR treatments can be calibrated to permit different capital approaches for different levels of over-the-counter derivatives activity.
The SFC proposes a small number of changes to FRR treatments applicable to licensed corporations which do not engage in over-the-counter derivatives activity. These include lowering the haircut percentages for certain types of shares and funds and introducing measures to better facilitate third-party clearing by general clearing brokers.
“The proposed changes aim to enhance our prudential regulatory regime to better align with recent developments in international capital standards for investment intermediaries. This will help maintain Hong Kong’s position as an international financial centre,” said Mr Ashley Alder, the SFC’s Chief Executive Officer.
In summary, the consultation paper’s proposals cover seven key areas:
- minimum capital requirements for licensed corporations engaging in over-the-counter derivatives activity;
- capital treatments for market risks of over-the-counter derivatives and other proprietary trading positions;
- capital treatments for counterparty credit risks arising from over-the-counter derivatives transactions;
- introduction of an internal models approach to calculate the capital requirements for market risk for proprietary investments and counterparty credit risk arising from over-the-counter derivatives transactions;
- measures to address operational risks of licensed corporations engaging in certain types of regulated over-the-counter derivatives activities or opting into certain capital approaches;
- notification and reporting requirements related to over-the-counter derivatives activity; and
- miscellaneous technical changes to other areas of the FRR.
Following the consultation, the SFC plans to further consult the public on subsidiary legislation which sets out the proposed changes. The public is invited to submit their comments to the SFC by 16 October 2015. Written comments may be sent online via the SFC website (www.sfc.hk), by email to [email protected], by post or by fax to 2523 4598.
For further details, please refer to:
http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=15PR76
6. Fund management business reached record high in 2014
On 21 July 2015, the SFC released its annual Fund Management Activities Survey (“FMAS”) which shows that the combined fund management business in Hong Kong sustained another year-on-year increase to reach a record high of HK$17,682 billion, up 10.5%, as of the end of 2014.
FMAS indicate that Hong Kong remained a preferred platform for international investors, who contributed an historic high of HK$12,404 billion and accounted for 71% of the fund management business. Assets managed in Hong Kong increased by nearly 18% to a record level of HK$6,856 billion.
“The latest survey underscored the trend of sustained growth in assets managed in Hong Kong, driven by our role as an intermediary for capital between the Mainland financial markets and the rest of the world,” said Ms Julia Leung, the SFC’s Executive Director of Investment Products. “The launch of the Mainland-Hong Kong Mutual Recognition of Funds scheme on 1 July will further encourage growth in this area and promote Hong Kong as a fund domicile and investment management centre.”
All market players recorded strong performance during 2014.
- The aggregate business of licensed asset management and fund advisory corporations amounted to HK$12,920 billion at the end of the year, up 9.6% and once again representing the largest proportion of the combined asset management business.
- Registered institutions recorded an 11.6% increase in their aggregate asset management and other private banking businesses, which reached HK$4,104 billion.
- Insurance companies reported a 24.2% increase in their assets under management to HK$452 billion.
Some other findings of the survey are set out below:
- Non-REIT (real estate investment trust) asset management business increased by 11.9% to HK$12,770 billion, of which HK$6,856 billion (or 53.7%) was managed in Hong Kong.
- 72.5% of the assets managed in Hong Kong were invested in Asia.
- Other private banking business increased by 12.5% to HK$3,095 billion.
- Fund advisory business decreased by 3% to HK$1,611 billion.
- The market capitalisation of SFC-authorized REITs increased by approximately 16.4% to HK$206 billion.
The FMAS report notes that a robust regulatory regime is fundamental to Hong Kong’s development as an international asset management centre. In this connection, the SFC will continue to work closely with Mainland and overseas regulators as well as stakeholders to maintain an effective and progressive regulatory framework for the benefit of both the financial industry and investing public.
The FMAS has been conducted annually since 1999 to help the SFC assess the state of the industry for policy and operational planning. This year, a total of 587 institutions responded to the survey on a voluntary basis. They included 519 licensed asset management and fund advisory corporations, 47 registered financial institutions and 21 insurance companies.
For further details, please refer to:
http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=15PR77
7. EY’s appeal over audit working papers discontinued
On 23 July 2015, EY has discontinued its appeal against court orders compelling production to the SFC of specified accounting records in its possession.
Background
On 23 May 2014, the Court of First Instance (“CFI”) ordered EY to produce specified accounting records relating to its work as the reporting accountant and auditor for Standard Water Limited (“Standard Water”) to the SFC. In 2012, the SFC brought proceedings against EY to compel the production of these documents after EY failed to provide them as part of an SFC investigation into the proposed listing of Standard Water. EY claimed it was not in possession of the papers and that they could not be produced because of restrictions under PRC law. In the judgment, the CFI rejected EY’s arguments and ordered EY to produce the required material to the SFC finding that EY had “deliberately withheld from SFC information in its knowledge”.
Since the decision of the Court of First Instance was handed down, the specified accounting records have been produced by EY to the SFC. The SFC is satisfied that all requested records have been produced and EY has complied with the court orders and agrees that the appeal is now academic.
The SFC now reminds Hong Kong audit firms that accounting or audit working papers relating to work carried on by Hong Kong accounting firms should be produced to the SFC in response to requests made under the SFO. This will be the case even if the requested documents/records are held on behalf of Hong Kong auditors by their Mainland affiliates or agents, subject to clearance by the Mainland authorities. Further, the obligation to identify records held in the Mainland and to seek their clearance lies with the auditor.
The SFC states that Hong Kong auditors should cooperate fully with the SFC in the investigation of suspected corporate wrongdoing, and that EY could have avoided litigation by conducting proper searches of its own offices here in Hong Kong and, where necessary, cooperating with the Mainland authorities to seek clearance of records created by its affiliate firms on the Mainland.
Comment
Under section 183 of the SFO, the SFC is empowered to request information from persons whom it believes may have information relevant to an investigation. If a person fails to comply with such a request without a reasonable excuse, the SFC can bring proceedings under section 185 of the SFO which empowers the CFI to inquire into the circumstances of non-compliance. The court can order the person to comply with the SFC’s request if it is satisfied that the person does not have any reasonable excuse for not complying.
For further details, please refer to:
http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=15PR79
8. SFC commences MMT proceedings against AcrossAsia Limited, its Chairman and CEO for late disclosure of inside information
The SFC has commenced proceedings in the Market Misconduct Tribunal (“MMT”) against AcrossAsia Limited (“AcrossAsia”) for failing to disclose highly sensitive inside information as soon as reasonably practicable.
Background
The SFC has also commenced proceedings in the MMT against Mr Albert Saychuan Cheok (“Mr Cheok”), the Chairman of AcrossAsia, and Mr Vicente Binalhay Ang (“Mr Ang”), the Chief Executive Officer of AcrossAsia, for their reckless or negligent conduct causing the alleged breach by the company of the provisions of the statutory corporate disclosure regime.
This is the first set of proceedings in the MMT brought by the SFC in relation to the disclosure obligations imposed on listed companies under the Securities and Futures Ordinance since they became effective on 1 January 2013.
The SFC’s allegations arise from the litigation in Indonesia between AcrossAsia and its subsidiary, PT First Media Tbk (“PT First Media”). At dispute was the failure of AcrossAsia to repay the money owed to PT First Media. The litigation led to enforcement proceedings by PT First Media against AcrossAsia, including insolvency-related proceedings in Indonesia against AcrossAsia by way of a petition dated 20 December 2012 and a summons dated 28 December 2012. These proceedings sought, among other things, to suspend AcrossAsia’s obligation for payment of debts temporarily to enable a composition plan to be presented to PT First Media and to appoint an Indonesian judge and administrators to manage AcrossAsia’s assets.
Copies of the court documents, which were in Bahasa Indonesian, were received by AcrossAsia’s Hong Kong office on 2 January 2013, and their English translations were circulated to Mr Cheok and Mr Ang on 4 January 2013. However, AcrossAsia did not disclose such information to the public until 17 January 2013 after the Indonesian court made these insolvency-related orders against AcrossAsia on 15 January 2013. AcrossAsia sought a suspension of trading on 15 January 2013 and when trading resumed on 22 February 2013, the share price fell by 22.5%.
The SFC alleges that the issue of the insolvency-related proceedings in Indonesia together with their contents were specific information regarding AcrossAsia, highly price sensitive and not generally known to the public at the material time because these proceedings threatened AcrossAsia with loss of control of its major asset, including its stake in PT First Media in Indonesia, and could lead to AcrossAsia being put into liquidation.
For further details, please refer to:
The article is for general information purpose only and is not intended to constitute legal or other professional advice.
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