Hong Kong’s Securities and Futures Commission (SFC) has banned Chan Hau Wing, a licensed employee at Xiu Futures Company Limited, from re-entering the industry for two years for conducting unauthorized trades in a client’s account, according to a SFC statement.
The disciplinary action follows an SFC investigation which found that a client of Yue Xiu Futures has telephoned and instructed Chan to buy 13 futures contracts in crude oil but he mistakenly placed a sell order. Instead of reporting the matter to the company’s management, Chan sought to reduce the loss by trading in the client’s account without any proper authorization.
Furthermore, Chan did not report the trading error to Yue Xiu Futures until the client made enquiries with the company about the trades conducted in his account, on the afternoon of 10 February 2014.
Compliance Violations
As such, Chan acted contrary to the internal policy of Yue Xiu Futures which provides that when there is a trading error, the erroneously placed order should be handled immediately using a designated error account and the senior management should be notified at once. Chan’s conduct also fell short of the standard set out in the Code of Conduct, casting doubt on his fitness and properness to be a licensed person.
After taking into account all relevant circumstances, including that Chan had no previous disciplinary record, the SFC has decided to ban Mr Chan Hau Wing from re-entering the industry for two years from 13 July 2016 to 12 July 2018. The watchdog further stated that Chan did not act in the best interests of the client when he conducted the unauthorised trades in the account without the client’s authorization, breaching the General Principal 2 and paragraph 7.1 of the Code of Conduct.
Not fit and proper
Chan is not currently licensed by the SFC nor registered with the Hong Kong Monetary Authority, although during the period in question he was permitted to carry on Type 2 (dealing in futures contracts) regulated activity and was accredited to Yue Xiu Futures until March 2014.
The affected client had been compensated by Yue Xiu Futures. Last time Finance Magnates reported about the SFC activity was last week when the watchdog added two unlicensed companies, CVC Groups Private Capital and Arthur-Sera Ltd, to its alert list for not having the required permissions to offer their services in Hong Kong.
