Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has banned a former trader at Deutsche Bank AG’s South Korean brokerage unit from re-entering the industry for 10 years after he was convicted of manipulating share prices in November 2010.
The SFC disciplinary action was taken against Derek Ong who was previously sentenced by a Seoul court to a five-year jail term. Moreover, his employer, Deutsche Securities Korea Co. (DSK), was fined KRW 43,695 million ($37.17 million) for market manipulation that caused the Korean equity market’s index to wipe out 2.79% in ten minutes.
According to the SFC, the one-day selloff occurred in November 2010 during the closing auction period when the Korean Composite Stock Price Index 200 (KOSPI200) dropped sharply as a result of manipulative order instructions set by the bank’s Korean employee and his colleagues from Hong Kong-based Deutsche Bank.
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In addition, the SFC stated that Mr. Ong established an option position to illegally profit from deliberately triggering the KOSPI200 index’s plunge.
As such, the SFC said that Derek Ong 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 is considered very serious misconduct as it misleads investors and damages market integrity. After taking into account all relevant circumstances, the SFC decided to suspend Mr. Ong for a period of 10 years from 17 November 2016 to 16 November 2026.