SFC Bans Former Sincere Securities Employee for Unauthorized Trades

Shum deceived his client by providing her with false and misleading account information to hide investment losses.

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has banned a former account manager at Sincere Securities Limited from re-entering the industry for life after he was convicted of conducting unauthorized trades from client accounts.

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The SFC’s investigation found that on several occasions between March 2014 and May 2015, Shum Kam Ming had placed discretionary trades on behalf of a clients without obtaining the proper authorization. He also created deceptive records to give the impression that the trade instructions originated from or were confirmed with the client.

In addition, Mr. Shum deceived his client by providing her with false and misleading account information with the intent of concealing the extent of investment losses. The violation occurred while he was a registered representative with the SFC under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities).

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In addition to providing fake accounting statements to the client, Shum also opened an investment account for this client with an associate company, but without her knowledge or authority.

As a result of his misconduct, Sincere Securities had to pay unknown amount to the affected client to compensate for her losses.

As such, Shum 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 watchdog further stated that Shum did not act in the best interests of his clients 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.

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