SFC Slaps Brokerage Executive with Lifetime Ban for Defrauding Clients

Before his fraudulent actions, Shing had a clean disciplinary record with the commission.

Hong Kong’s securities market regulator today said that it has slapped a former employee of broker Fulbright Securities with a lifetime ban and a HK$542,071 fine for defrauding his clients and conducting unauthorized trades from their accounts.

An investigation by the Securities and Futures Commission found that over a 17-month period – between January 2013 and May 2014 – Danny Fung Kwong Shing had conducted around 772 unauthorised transactions which affected two clients, amounting to substantial losses for his victims. He also created deceptive records to give the impression that the trade instructions originated from or were confirmed with the client.

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In a statement, the Securities and Futures Commission explained: “The investigation also revealed that at least 53 of the above-mentioned unauthorized transactions were conducted by Fung under a premeditated scheme to secure profits for Y, with the result that Y made profits from these transactions at X’s expense by selling shares to X at prices higher than the purchase prices.”

Both X and Y were friends of Shing, who acted as the account executive of their trading at Fulbright Securities. The SFC’s investigation revealed that Fung had devised a premeditated scheme to secure profits for Y’s trades through dishonestly mis-using X’s account.

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The fraudulent transactions stopped when Fulbright Securities reported Shing to the regulator. The SFC said Shing’s actions of “dishonesty” meant he would be prevented from ever re-entering the industry.

Shing had attempted to conceal his actions by faking telephone calls and conversations with clients to cover his unauthorised transactions. As a result of his misconduct, he may be obliged to pay $2.6 million to a single client to compensate for his losses.

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

Before his fraudulent actions, Shing had a clean disciplinary record with the commission.

 

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