Hong Kong's securities regulator has resolved compliance issues with leveraged foreign-exchange trader Hantec International (HI) by reprimanding the firm and fining it HK$4 million, while Hantec Investment Consultant (HIC) has voluntarily surrendered its licence.
The two firms are currently known as Cinda International FX and Cinda International Investment Consultant, respectively.
The Securities and Futures Commission (SFC) found that, in 2004 and 2005, HI: failed to adequately supervise its staff and prevent cold-calling activities; facilitated the unlicensed activities of Cosmos Hantec Investment (NZ); failed to comply with margin requirements for forex contracts; failed to set forex position limits for itself and trading limits for its clients; and failed to handle complaints and report suspected breaches to the SFC in a timely manner.
The regulator decided to enter into this agreement rather than proceed with disciplinary action because: the failures were attributable to the former management of Hantec, which has been replaced; the business is now under new ownership; and Cinda International Holdings (CIH), the parent company of HI and HIC, has agreed to dissociate itself from certain current and former senior management members of the Hantec Group and to close down HI and HIC.
The SFC has emphasised that its concerns about the operations of HI and HIC did not involve CIH or its current management. It has acknowledged the cooperation and assistance of CIH in resolving the case at both investigatory and disciplinary stages.
The reprimand stems from a number of complaints made to the SFC against Hantec and its licensed representatives between 2000 and 2002. Disciplinary action was also taken against three Hantec Group employees for unlicensed leveraged FX trading in June last year.