Hong Kong’s Securities and Futures Commission (SFC) announced today that it has fined SynerWealth Financial Ltd $2.7 million for internal control failures relating to short selling orders and for not reporting the deficiencies of its trading system to the SFC in a timely manner.
The latest fine comes just a day after the SFC reprimanded and fined another firm, Guotai Junan Securities Ltd (Hong Kong), $1.3 million for failing to comply with its regulatory requirements.
Ineffective Internal Control Procedures
In this particular case, the SFC’s investigation found that from November 2012 to January 2014, there were at least 65 instances of short sales executed by SynerWealth resulting from its failure to put in place effective internal control procedures to detect and prevent short selling.
It was also found that SynerWealth identified deficiencies in its self-developed trading system as early as January 2013 but failed to report the errors and defects of the system to the commission.
The SFC highlighted the fact that adequate and effective internal control systems are fundamental to the fitness and appropriate conduct of a licensed corporation. Taking into account all relevant circumstances of the case, including SynerWealth’s failures which extended over a 14 month period, the SFC has imposed a fine of $2.7 million.
