Hong Kong’s Securities and Futures Commission (SFC) has suspended Ko Cho Ting, a licensed employee at Emperor Securities Limited, from re-entering the industry for two years for executing suspicious client orders and operating a secret securities account, according to an SFC statement.
The disciplinary action follows an SFC investigation which found that a client of Emperor Securities had instructed Ko to place a small order for Timeless Software Limited shares during the last two minutes of the Continuous Trading Session. The Continuous Trading Session comprises the morning and afternoon sessions between 09:30 am and 04:00 pm. The last two minutes of the Continuous Trading Session refer to two minutes from 3:58:00pm.
The suspicious bid orders were meant to inflate the closing price of Timeless shares, and so this can be considered manipulative activity. From 1 May to 28 June 2012, the client placed the orders on 18 trading days and 17 of these late orders were the last order of the day that set a higher closing price for Timeless shares.
According to an independent market expert, the late orders have raised the nominal price of the shares on all 18 trading days by 3 to 20 spreads (or 2.1% to 14.2%) at the time when they were input, and 17 out of 18 late orders were the last order of the day and set the closing price of the shares on the relevant trading days.
Legal Risk Factor Beneath Ripple’s Lawsuit from SECGo to article >>
Instead of reporting the matter to the company’s management, Ko acted in accordance with the client’s instructions and made no proper inquiries.
Not fit and proper
In addition to the aforementioned violation, Ko also breached Emperor’s staff dealing policy after not disclosing that he maintains a trading account at HSBC. The SFC noted that Ko had dealt with Timeless shares in the HSBC account during the relevant period but there is no evidence that trades were based on the information obtained from his client.
Ko joined the industry in 1994 and had worked in the securities industry for 18 years at the time of the misconduct, so he should have been well aware that the Late Orders were potentially manipulative and that all of his personal trading accounts should have been disclosed to Emperor.
After taking into account all relevant circumstances, including that Ko had no previous disciplinary record, the SFC decided to suspend Mr. Ting for two years, from 2 August 2016 to 1 August 2018. At the time, Ko was an account executive and a branch manager of Emperor Securities Limited.
Ko 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 and was accredited to Emperor Securities Limited from 6 October 1994.