The Hong Kong Securities and Futures Commission (SFC) today announces the suspension of the licence of Mr Lun Sheung Nim, a responsible officer of GEO Securities Limited. The suspension will run for 7.2 months – from 10 June 2021 to 16 January 2022.
The disciplinary action follows the SFC’s sanctions against GEO for breaches of its licensing conditions and failures related to its sale of unlisted bonds between 1 July 2014 and 16 November 2015.
The regulator found that GEO’s breaches and failures during the material period were attributable to Lun’s failure to discharge his duties as an RO and a member of GEO’s senior management.
By allowing GEO to provide discretionary account management services to clients and introduce clients directly to listed companies to subscribe for their unlisted bonds during the material period, Lun directly contributed to GEO’s breach of the conditions on its licence. Lun also showed a fundamental failure to understand and properly manage the risks associated with GEO’s business.
In particular, Lun failed to:
- ensure that GEO conducted adequate due diligence on the unlisted bonds before their recommendations to clients;
- establish an effective system at GEO to assess clients’ risk tolerance and ensure the recommendations and/or solicitations made to clients in relation to the unlisted bonds were suitable and reasonable for the clients;
- implement policies and procedures at GEO to ensure documentary records of investment advice or recommendations made to clients were maintained and a copy of the written advice was given to clients; and
- ensure GEO disclosed the commission it received from issuers for the successful placement of the unlisted bonds to clients.
The SFC has concluded that Lun’s conduct fell short of the standard required of him as an RO for a licensed corporation.
In deciding the disciplinary sanction, the SFC took into account a variety of factors, including the seriousness of GEO’s regulatory breaches and Lun’s cooperation and willingness to resolve the SFC’s concerns.