SFC imposes $2M fine on Chee Tak Securities Limited for regulatory breaches
Hong Kong’s Securities and Futures Commission (SFC) has reprimanded and fined Chee Tak Securities Limited (CTSL) $2 million for internal control deficiencies and a host of regulatory breaches.
The SFC has also suspended the licence of its responsible officer Kevin Chiu Koon Yu for 10 months from 15 September 2023 to 14 July 2024.
The disciplinary actions followed the SFC’s investigation which found that, between 1 July 2018 and 5 March 2020, CTSL failed to have in place an order recording policy and observe the order recording requirements. The company also failed to implement effective internal controls to monitor cross trades between staff members and clients and to ensure fair treatment of clients.
Furthermore, the company did not establish and maintain an adequate and effective monitoring system to detect and assess suspicious transactions in client accounts. It also did not set up systems and controls to identify and assess third-party deposits into client accounts.
CTSL failed to require or obtain written third-party authorisation for the operation of client accounts.
Finally, the company did not institute internal controls to monitor employee dealings.
The failures of CTSL constituted breaches of the Code of Conduct, the Internal Control Guidelines and the Circular to licensed corporations and associated entities – Third-party deposits and payments issued by the SFC on 31 May 2019.
The SFC considers that CTSL’s failures were attributable to the failures of Chiu in discharging his duties as its responsible officer and a member of its senior management and called into question his fitness and properness.
In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including CTSL’s financial situation, CTSL’s cessation of business, CTSL and Chiu’s cooperation in resolving the SFC’s concerns, and their otherwise clean disciplinary record with the SFC.