The Securities and Futures Commission (SFC) has issued a reprimand to China Securities; fined it $1.3 million and banned its responsible officer, Ms Stephanie Liu Suk Wai, for a period of 27 months effective from 15 August 2013 to 14 November 2015.
The decision follows an SFC investigation into the affairs of China Securities from 2007 to 2011 in which a number of serious deficiencies were found in relation to order record keeping, employment of unlicensed dealing staff and supervision of its dealing functions.
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The SFC found that China Securities employed staff who were unlicensed as dealers to take order instructions from clients and to execute them on behalf of clients and permitted its dealing room to be operated by two unlicensed dealers without a responsible officer to supervise the dealing functions (Notes 3 & 4).
The SFC also reviewed the dealing records of China Securities from November 2009 to June 2011 and found that most if not all of China Securities’ order tickets were not time stamped. As a result, the incomplete order records failed to enable trade executions to be traced through China Securities’ system to identify for whose accounts those trades were executed (Note 5).
China Securities ceased business on 31 December 2012. But for the firm ceasing business, the SFC would have revoked its licence given the sustained, serious and deliberate nature of its misconduct.
The failures of China Securities were attributed to Liu who was one of the three responsible officers of China Securities at the relevant time. She was seldom at the office and neglected her management responsibility. Her failure was serious in that she connived the unlicensed activities.
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By GlobalDataIn determining Liu’s penalty, the SFC took into account that she was no longer licensed and that she did not dispute the SFC’s findings. Had Liu remained licensed, her licence would have been revoked.
The SFC’s investigation into the roles of other members of the management team at China Securities is continuing.
