The Securities and Futures Commission of Hong Kong has revoked the licence of the asset management firm of IDS Forex HK Ltd and has prohibited its former co-chief executive officers, Mr Chung Wooman and Mr Ki Bonggan, from re-entering the financial services industry for life.
IDS Forex was licensed under the Securities and Futures Ordinance to carry on business in Type 3 (leveraged foreign exchange trading), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.
Chung was a 'responsible officer' (manager approved by the SFC) at the firm in respect of its Type 3 business between 30 June 2015 and 11 May 2016, and between 21 July 2016 and 29 May 2017. He was also the former co-chief executive officer and director. Ki was his fellow CEO and director between June 2016 and June 2017. Ki was and is not licensed by the SFC, but counted as a “regulated person” at the relevant time because he was a manager.
In early June 2017, the SFC conducted an inspection at IDS Forex after its compliance officer - in the face of great discouragement from Ki - sent in a report about problems concerning the firm's sole shareholder, Kim Sunghun, who was convicted and sentenced to 12 years' imprisonment in Korea in February 2017 for illegal fundraising and fraud. The regulator thought that the capital injections that Kim had made into IDS might be the proceeds of crime, so it issued a restriction notice.
Kim became a shareholder in June 2015 after injecting HK$27 million into the firm and, three months later, became the sole shareholder. Between December 2015 and August 2016 he injected a total sum of HK$165 million into IDS Forex. As chairman, he met HNW investors at the firm's offices to coax them into investing.
Ki did not notify the SFC about Kim’s arrest and conviction until the inspection, while Chung remained silent all the while, prompting the regulator to conclude that both men lacked integrity. The regulator says that IDS Forex broke section 4 of its Licensing Information Rules, General Principle 7 and paragraph 12.1 of the code of conduct for firms that it has licensed.