SFC Issues Further Notices to Brokers for Client Misconduct

The three brokers have been issued the restriction notices as some of their clients are suspected of market misconduct.

The Securities and Futures Commission (SFC) in Hong Kong announced this Friday that it has issued restriction notices to three brokers because the regulator believes some of their clients have engaged in suspicious activity.

The three brokers in question are Changjiang Securities Brokerage (HK) Limited, Haitong International Securities Company Limited and Kingston Securities Limited. The SFC has issued the restriction notices as it believes it is in the public’s best interest.

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According to the statement, the restriction notices prohibit the brokers from: “dealing with or processing certain assets held in various client accounts which are related to the suspected disclosure of false or misleading financial information in various announcements, annual results and annual reports of a listed company, which was likely to induce transactions.”

The restriction notices are a result of an ongoing investigation into suspected market misconduct. However, this investigation did not focus on the brokers, only on certain clients. The SFC highlights that the restriction notices will not impact the broker’s operations nor their other clients which aren’t suspected of market misconduct.

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Specifically, as per the restriction notices, the three brokers are prohibited, unless the SFC’s prior written consent has been given, with: “disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with, certain assets in any way in the client accounts…”

The notices were issued under section 204 of the Securities and Futures Ordinance (SFO). All three brokers are regulated and licensed under the SFO to conduct financial activities within Hong Kong.

SFC Issues Restriction Notices in January

At the beginning of this year, the SFC issued a similar restriction notice to three other brokers – Fulbright Securities Limited, Futu Securities International (Hong Kong) Limited and Gong Ping Securities Limited, as Finance Magnates reported.

The restrictions from the Hong Kong regulator is very similar to those issued today and could be from the same ongoing investigation into market misconduct.

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