North American Derivatives Exchange (Nadex), a part of IG Group Holdings plc (LON:IGG), has taken a disciplinary action against Shuk Hung for violation of several of the rules of the Exchange.
During the course of its investigation, the Compliance Department analyzed the order and trading activity throughout the life of Hung’s Nadex account. Through this review, the Compliance Department discovered that Hung engaged in or attempted to engage in a manipulative scheme to defraud Nadex markets in several FX binary option contracts between August 5, 2019 and August 6, 2019.
Also, Hung responded only to certain inquiries and requests for information. She did not adequately respond to requests for her banking and trading activity, among other things.
The Compliance Department also found that Hung allowed another Nadex Member to fund her Nadex account by transferring funds into Hung’s bank account which were subsequently transferred to Nadex, thus providing the other Member with a direct economic interest in the activity and trading in Hung’s Nadex account.
The Compliance Department also found that Hung allowed a third party to access her Nadex account. Further, during the course of this investigation, Hung provided misleading information to the Compliance Department relative to her connections with other Nadex Members and source of funding.
Accordingly, the Compliance Department has concluded that Hung violated Member Acknowledgements and Authorizations, Section (h) of the Nadex Membership Agreement and Exchange Rule 3.3(a) by failing to fully cooperate with this investigation.
Additionally, Hung violated the Nadex Membership Agreement, Member Representations Section (d), when she allowed another Nadex Member to have a direct economic interest in the activity and trading in her Nadex account.
Also, Hung violated Nadex Rule 5.2(e) and the Nadex Membership Agreement, Member Acknowledgements and Authorizations, Section (a) by allowing a third party to access her account and failing to protect her username and password, or knowingly permitting third party access.
Finally, Hung’s manipulative activity was to the detriment of other market participants. Engaging or attempting to engage in conduct and practices that are manipulative and inconsistent with just and equitable principles of trade, and that pose a risk to the Exchange, its members, and/or to the public, is in contravention of Nadex Rules 5.19(h), 5.19(i), 5.19(n) and 5.19(t). Accordingly, the Compliance Department has concluded that Hung violated Nadex Rules 5.19(h), 5.19(i), 5.19(n) and 5.19(t).
As a result of the aforementioned violations, the Nadex Compliance Department has deemed it appropriate to assess Shuk Hung a fine of $22,000 and order her to pay disgorgement in the amount of $20,882. On top of that, Shuk Hung’s Nadex Membership has been revoked, her account terminated, and she has been permanently banned from trading on Nadex Markets, either directly for her own account or through an intermediary, or as an authorized trader on behalf of any other account.
The effective date of the disciplinary notice is October 13, 2021.