Hong Kong’s securities regulator has banned Fa Kwan-Lun from re-entering the industry for 12 months for concealing his personal securities trading activity and mishandling clients’ money.
The Securities and Futures Commission (SFC) considered Fa not to be a fit and proper person because of his misconduct.
Li, a former BOCI Securities account executive, was found to have:
- concealed from his employer his beneficial interest in, and his personal trading activities conducted through the securities account of his mother-in-law; and
- mishandled his clients’ money by transferring funds for them to their trading accounts through his personal bank account.
The SFC’s code of conduct requires employees to declare all transactions in their accounts and related accounts.
BOCI staff members are required to declare their investment holdings, including those in accounts not held by them.
But in declarations made to BOCI, Fa did not fully disclose his trading activities.
While working at the firm, between March 2007 and December 2012 Fa conducted securities trading for himself through his mother-in-law’s account maintained with BOCI. He contributed all the trading funds in the account.
The SFC also found that Fa had transferred funds for four clients into their trading accounts through his personal bank account between June 2011 and July 2012. By letting his clients’ money mingle with his own, he failed to ensure their assets were properly safeguarded, the SFC said.
Fa said he used his mother-in-law’s account because he wanted to be treated like a regular investor and not be subject to his supervisor’s approval.
BOCI’s policy also prohibits its representatives from handling client money and requires them to seek approval from to receive money from a third party into a client’s account. Fa said he was aware of the policy, but that his clients were not able to transfer money to their securities accounts directly.
The SFC rejected this as an excuse for Fa’s behaviour and determined that he should have advised his clients to deposit money into their securities accounts through a proper channel or informed BOCI of the matter.
Further, it said the way he handled his clients’ money suggested he had failed to act with due skill, care and diligence in managing his clients’ accounts and he failed to diligently ensure his clients’ assets were properly safeguarded.
In deciding the penalty, the SFC took into account that Fa’s concealment of his trading was deliberate and dishonest, the way he handled his clients’ money fell short of the standard expected of a licensed representative, his misconduct spanned a long period, and that he was remorseful and otherwise had a clean disciplinary record.
Fa was licensed to carry on type 1 (dealing in securities), type 2 (dealing in futures contracts) and type 3 (leveraged foreign exchange trading) regulated activities. He was accredited to BOCI Securities between May 2006 and December 2012. He is not currently licensed by the SFC.
His ban will end on July 3 next year.