The Hong Kong Securities and Futures Commission (SFC) has reprimanded CN Capital Management Limited (CN Capital) and issued a $1,000,000 fine for not being able to maintain an effective compliance function and satisfactory internal controls concerning employee account dealings.
In addition, the SFC has also reprimanded the company’s responsible officers, George Chan Yee Lee and Stephen Ng Wing Leung and handed them fines of $100,000 each for failure to comply with the employee account dealing requirements under the Fund Manager Code of Conduct.
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According to the SFC, the two men breached the core principle that persons engaged in fund management business, when transacting for themselves, must give their clients priority and avoid conflicts of interest.
The SFC’s investigation revealed that between January 2011 and October 2016 none of the staff members of CN Capital disclosed their personal investment holdings to CN Capital in writing. In addition, Chan and Ng conducted a total of 3,188 personal trades without obtaining any written pre-clearance from the designated officer of CN Capital.
In deciding the sanctions, the SFC took into account all circumstances, including the fact that CN Capital itself reported the failures and breaches to the SFC, as well as the fact that it cooperated with the SFC in resolving the issue.