The Securities and Futures Commission (SFC), the Hong Kong financial market regulator, has fined Japanese broker Okasan International (Asia) $4 million for failure to properly disclose trading profits and for breaches of rules concerning trading in unlisted investment products, the regulator said in a statement.
Suspicious Unlisted Product Recommendations
Among the violations found by SFC, committed between January and September 2013, are failure to conduct proper due diligence on unlisted products before recommending them to clients, as well as failure to make sure these recommendations were suitable for the clients’ circumstances.
In addition, the Japanese firm failed to keep proper documentation regarding these recommendations, including not providing clients with a copy of the respective recommendation, and failure to disclose the trading profits it made from back-to-back transactions on behalf of its clients.
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Company cooperated with the investigators and agreed to carry out an independent review
The regulator, however, noted that the company cooperated with the investigators and agreed to carry out an independent review of the systems and controls in place regarding its unlisted product offering. SFC also took into account the fact that this was the first disciplinary action taken against the company.
Okasan International (Asia) is the Asian regional division of Okasan Securities Group. The parent company is active in securities and asset management, with the securities business including, besides consulting and investments in shares and bonds, an online forex trading service. According to its website, it also provides IPO underwriting services, as well as IT systems development and maintenance for securities firms.