Hong Kong SFC Suspends Ku Yuen ‎Leung over Suspicious Trades

According to the independent regulator, Ku’s misconduct has undermined the integrity of the market.

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.‎

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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. ‎

 

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