Hong Kong's Securities and Futures Commission has banned Mr Lai Wing Fat, a former licensed representative of Black Marble Securities Ltd, from re-entering the industry for 20 months up until 4 March 2022 for breaking its Code of Conduct.

The regulator says that between August 2016 and June 2017, Lai effected transactions in an HNW client’s account on a discretionary basis without permission. He also effected discretionary transactions in the accounts of three other clients without the same.

The SFC also found that Lai had failed to explain the Chinese account-opening documents and risk disclosure statements to the client to ensure that he understood the content and relevant risks before signing the documents, even though Lai was aware that the client had difficulty understanding the Chinese documents.

The SFC considers that Lai had failed to act with due skill, care and diligence and in the best interests of the clients. Lai had an otherwise clean disciplinary record. He was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) regulated activity and accredited to Black Marble Securities Limited from 22 April 2016 to 9 October 2017.

General Principle 2 of the Code of Conduct for Persons Licensed by or Registered with the SFC (which Lai allegedly contravened) states that a licensed person should act with due skill, care and diligence, in the best interests of its clients and the integrity of the market in conducting its business activities.

Paragraph 7.1(a)(ii) of the code required him to obtain written authorisation from a client before effecting transactions for him. Paragraph 7.1(d) requires senior managers to approve the opening of discretionary accounts. There must always be a 'client agreement' which must always be in Chinese (presumably Cantonese in Hong Kong) or English