Hong Kong’s Securities and Futures Commission (SFC) has banned two former employees of the Hongkong and Shanghai Banking Corporation Limited (HSBC), from re-entering the industry for life for engaging in misleading sales practices with respect to certain investment schemes, according to an SFC statement.
In particular, the SFC disciplinary action stems from an investigation that found evidence of wrongdoing between 2012 and 2014. The complaint alleges that throughout this period, Ms. Chau Hang Yu and Mr. Steve Chow Chun Yin were in charge of selling and promoting investment products at HSBC. To get higher commissions, the respondents made false and misleading claims that some of the lender’s clients had agreed to subscribe for unit trust funds (UTFs). Chau and Chow received sales commission over the alleged misrepresentations after HSBC processed the subscription orders in the belief that they had sold the UTFs to the customers when in fact this was not the case.
Furthermore, Chau referred some of her customers to Chow after she reached the maximum commission cap, and after defrauding the bank and customers she had taken additional $100,000 from her colleague.
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As such, the SFC said that Chau and Chow are guilty of misconduct and are not fit and proper persons to remain licensed. In addition, the regulator has surmised that the manipulative conduct was not a one-off event but was observed over a period of almost two years, which is considered by the watchdog to be very serious misconduct as it misleads investors and damages market integrity.
Chau and Chow were found guilty on 23 February 2016, and after having been convicted for two counts of fraud under the theft ordinance, the District Court sentenced Chau to 12 months in prison, while Chow was jailed for 18 months.
Neither convicted persons are currently licensed by the SFC or registered with the Hong Kong Monetary Authority, although during the period in question they were permitted to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activity.
Earlier in July, Finance Magnates reported on the SFC when the regulator banned a licensed employee at Xiu Futures Company Limited from re-entering the industry for two years for conducting unauthorized trades in a client’s account.