SFC Suspends CTSL Account Executive for Unauthorized Trades

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has banned a former account executive of China Tonghai Securities Limited (CTSL) from re-entering the industry for 18 months after he was convicted of conducting unauthorized trades from client accounts.

The SFC’s investigation found that on several occasions between April 2011 and June 2018, Chan Yiu Ting had placed 6,031 trades involving over $573 million worth of shares on behalf of a client without obtaining the proper authorization.

Furthermore, the account manager did not report the unauthorised transactions to CTSL and also failed to keep a proper record of the clients’ instructions, which were sent to him.

CTSL’s records showed that the client signed discretionary authority on the account but with another account executive, who was in fact Chan’s brother. The discretionary authority was revoked in 2011, when the client apparently decided to switch the authority to manage his accounts to Chan.

However, the client did not sign the required documents to authorize Chan to operate the account. And when CTSL’s 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 department asked Chan to obtain written approval from the client to manage her account, as well ratifying the previous trades, the former executive failed to either contact or follow up on the matter with the client.

The violation occurred while he was a registered representative with SFC under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities and accredited to CTSL. Following the regulator’s decision, Yiu Ting is no longer licensed by the SFC nor registered with the Hong Kong Monetary Authority.

Chan acted contrary to the internal policy of his company whilst his conduct also fell short of the standard set out in the Code of Conduct, casting doubt on his fitness to be licensed, the SFC said.

The watchdog further stated that Chan did not act in the best interests of his client when he conducted the unauthorised trades in the account without permission, breaching the General Principal 2 and paragraph 7.1 of the Code of Conduct.