Hong Kong watchdog revokes IDS Forex licence
The Hong Kong Securities and Futures Commission (SFC) today announces that it has revoked the licence of IDS Forex HK Limited. The regulator also banned IDS Forex’s former co-chief executive officers, Mr Chung Wooman and Mr Ki Bonggan, from re-entering the industry for life.
The disciplinary action follows an SFC investigation triggered by a self-report by IDS Forex’s then responsible officers in June 2017. They informed the SFC that IDS Forex’s sole shareholder, Mr Kim Sunghun, was convicted and sentenced to 12 years of imprisonment in Korea in February 2017 for illegal fundraising and fraud after his arrest there in September 2016. The fraudulent scheme involved Kim soliciting investors between 2011 and 2016 to invest in his purported overseas business, including margin Forex business.
The SFC’s investigation found that Kim, who was an officer involved in the management of IDS Forex and employed in the capacity as “chairman”, had made capital injections totalling $192 million into IDS Forex between 2015 and 2016. In addition, Chung and Ki reported to Kim directly about IDS Forex’s business operations and executed his investment decisions.
The arrest and conviction of Kim in Korea, which fundamentally impugns his reputation, character and reliability, called into serious question IDS Forex’s fitness and properness to be licensed.
IDS Forex was licensed under the Securities and Futures Ordinance (SFO) to carry on business in Type 3 (leveraged foreign exchange trading), Type 4 (advising on securities) and Type 9 (asset management) regulated activities
The SFC’s concerns over IDS Forex’s fitness and properness are aggravated by: (i) the correlation between the timing of the fraudulent scheme and Kim’s capital injections into IDS Forex; and (ii) IDS Forex’s failure to notify the SFC within the prescribed time limit after Kim’s arrest and conviction.
The evidence further shows that Chung and Ki became aware of Kim’s arrest and conviction shortly after the events, but Ki did not report the matter until the SFC’s inspection in June 2017 and Chung stayed silent all the while. The SFC considers that their failures in this regard show a lack of integrity and reliability on the parts of IDS Forex and its former senior management.
In determining the disciplinary sanction, the regulator has taken into account all relevant factors, including the need to protect the investing public and to preserve the confidence of investors and the public in market integrity.