SFC Fines Promising Securities $3.5m for Misappropriating Client Assets

Hong Kong’s Securities and Futures Commission (SFC), the country’s paramount securities regulator, hit brokerage firm Promising Securities Company Limited (Promising) with a $3.5 million fine on Wednesday over regulatory breaches and internal control failings which resulted in misappropriating client assets.

[gptAdvertisement]

The SFC’s investigation found that on numerous occasions, spanning across a 4-year period, Promising had allowed its staff to perform both sales and settlement functions, which gave them the opportunity to misappropriate around $8 million worth of client assets. Promising was unable to detect the fraud action, which affected 24 accounts, until a client informed the firm that 1,600 HSBC shares had gone missing from her trading account.

As such, the company failed to implement adequate internal control procedures that ensure effective segregation of its operational functions. The failings breached the watchdog’s the Client Money Client Money Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Read this Term Rules as well as the SFC’s Code of Conduct (Notes 3 & 4), which are designed to protect client assets.

In deciding the sanction, the SFC took into account all relevant circumstances, including that Promising has taken steps to return the misappropriated assets to all clients who suffered losses as a result of the non-Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term. Moreover, in response to the SFC findings, the company will hire independent consultant to review its customer money and asset processes in place, as well as to strengthen its governance and controls.