Hong Kong’s Securities and Futures Commission (SFC) has suspended Ku Yuen Leung, a licensed employee at BOCOM International Securities Limited, from re-entering the industry for 18 months for engaging in manipulative activities with respect to the shares of Agricultural Bank of China Limitedand, according to a SFC statement.
In particular, the SFC disciplinary action stems from an investigation that found evidence of wrongdoing between 5 and 26 November 2010. During this period, Mr. Leung managed his brother-in-law’s trading account which was also maintained at BOCOM.
More specifically, Ku first bought five call warrants then placed an ask order at one spread higher to sell the same quantity of the warrants he just purchased. After that, he placed a total of 21 large-sized bid orders on 8 days then cancelled these orders shortly once the ask orders of the warrants were executed, at most 16 seconds after input.
The suspicious bid orders were meant to inflate the price of ABC shares. Ku’s ask orders of the call warrants were executed after the bid orders for ABC shares drove up the price for these warrants. In total, Ku made a gross profit of $15,500 from trading the call warrants.
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Not fit and proper
As such, the SFC said that Ku had been guilty of misconduct and is not a fit and proper person to remain or be licensed. In addition, the regulator has surmised that the concerned market-manipulative conduct was not a one-off event but was observed over a period of almost one month which is considered by the watchdog very serious misconduct as it misleads investors and damages market integrity.
After taking into account all relevant circumstances, including Ku’s remorse and acceptance of misconduct and his clean disciplinary record, the SFC decided to suspend Mr. Leung for a period of 18 months.
Ku is not currently licensed by the SFC nor registered with the Hong Kong Monetary Authority, although during the period in question he was permitted to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activity.