Hong Kong’s Securities and Futures Commission (SFC) has reprimanded Solomon Independent Financial Advisors and fined it HK$1.5 million ($192,818) for facilitating the unlicensed activities of employees at insurance broker Black Swan Capital International.
The SFC has also suspended the firm’s responsible officer, Connie Leung Wing Kam, for seven months from October 13, 2011 to May 12, 2012. Leung is also the managing director and owner of Solomon IFA.
An SFC investigation found that Solomon entered into an arrangement whereby Black Swan referred clients to the IFA in exchange for the insurance broker receiving commissions for trades executed by Solomon on behalf of referred clients.
The Black Swan employees who made the client referrals to Solomon also carried out services in regulated activities for the referred clients.
Solomon knew the arrangement with Black Swan required participants to be properly licensed by the SFC and that none of the Black Swan employees had been granted a SFC licence.
Leung was chiefly responsible for devising the arrangement with Black Swan, so she bore direct responsibility for Solomon’s conduct.
In deciding the disciplinary actions, the SFC has taken into account all relevant factors, including that Solomon and Leung have no previous disciplinary record and there is no evidence to suggest clients have suffered losses.
Solomon is licensed under the Securities and Futures Ordinance to carry on type 4 (advising on securities) and type 9 (asset management) regulated activities.