Hong Kong's securities regulator has banned a former executive of Fulbright Securities for 18 months for failing to make proper records of client order instructions and circumventing the recording requirements of his employer.
Leung Wai-Hung carried out these activities between February 2011 and August 2013, and as a result cannot re-enter the industry from October 31, 2014 to 30 April 2016.
During the latter period, Leung executed orders for holders of seven accounts that were designated as discretionary accounts, but were never operated on a discretionary basis. All order instructions were in fact given by the clients by calling his mobile phone.
However, Leung failed to make proper records of the order instructions. By designating the accounts as discretionary when they were not, Leung avoided the scrutiny of his employer on order recordings for those accounts.
The Securities and Futures Commission (SFC) has looked into the trading in these accounts and found no sign of any other misconduct. Nonetheless, it considered Leung’s conduct calls into question his fitness and properness as a licensed person, as he had not only failed to record and maintain a proper audit trail of the orders, but also misused the discretionary account arrangement to circumvent the order recording requirements.
Keeping proper audit trail of client orders is a basic and fundamental requirement expected of licensed persons, noted the SFC. Order instructions received from clients who have given discretionary authority to operate their accounts should be recorded in the same way as order instructions from other clients, added the regulator.
Leung was licensed to deal in securities and was accredited to Fulbright Securities between June 14, 2010 and October 31, 2013. He is currently not a licensed person.