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SFC bans account executive for four years

Chris Hamblin, Editor, London, 22 December 2015

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The Hong Kong Securities and Futures Commission has banned Mr Suen King Shan from re-entering the industry for four years because he broke its code of conduct by high-handedly executing orders without proper authorisation and side-stepping KYC obligations.

The SFC found that Suen had failed to perform proper account-opening procedures in relation to nominee accounts opened in the names of his mother, his aunt and his cousin-in-law (i.e. the nominees) at his firm of employment, Ko’s Brother Securities. Despite being their account executive at the time, he did not conduct know-your-client procedures with the nominees and left the account-opening matters to his wife, who was not a staff member of Ko’s Brother Securities. He also falsely declared on his mother’s account-opening forms that he had witnessed her signature and explained the contents of the risk disclosure statement to her.

Moreover, Suen was found to have executed his wife’s instructions to place orders in the nominee accounts without verifying whether the nominees had authorised the transactions. Suen’s wife did not have the required authorisation to operate the nominee accounts at that time. Furthermore, Suen was found to have conducted personal trading in the nominee account opened in the name of his cousin-in-law. In doing so, he concealed his beneficial interest and personal trading activities in this account, in breach of the employee code of share trading of Ko’s Brother Securities.

The SFC is of the view that Suen’s conduct was in breach of the code of conduct and called into question his fitness and propriety for the job of 'licensed person.' In fixing the penalty, the SFC notes that:

  • Suen’s conduct was dishonest and he had abused the trust that Ko’s Brother Securities had placed in him;
  • his conduct had made it possible for his wife to open the nominee accounts and carry out personal trading in them;
  • he was an experienced practitioner and, as such, he either knew or ought to have known that his conduct was improper;
  • his misconduct was serious, even though the clients suffered no reported loss; and
  • he had no previous disciplinary record with the SFC.  

General Principles 1 and 2 of the 'Code of Conduct for Persons Licensed by or Registered with the SFC' require licensed persons to act honestly, fairly, with due skill, care and diligence, and in the best interests of their clients and the integrity of the market, in conducting their business activities; licensed persons are required under paragraph 5.1 to take all reasonable steps to establish the true and full identities of their clients and their financial situations, investment experience and investment objectives; at the crucial time, according to paragraph 7.1, a licensed person should not effect a transaction for a client unless the client, or a person whom the client has picked, has specifically authorised it beforehand, or authorized the licensed or registered person in writing to effect transactions for him without his specific authorisation. (Paragraph 7.1 of the Code of Conduct has been amended since 1 December 2012.)

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