Hong’s Kong’s securities regulator has banned former Morgan Stanley employees Christopher Ma Chun-Leung and Wong Man-Chung from re-entering the financial industry, the former for 10 years and the latter for two years, for misconduct.
The Securities and Futures Commission (SFC) found that Ma and Wong acted against the best interests of their clients on several occasions in 2009 and 2010, and dishonestly took advantage of institutional clients’ stock trade orders on the Hong Kong exchange.
While working as an executive director and program trading desk superviser at Morgan Stanley, Ma and Wong, a trader under him, executed clients’ orders on the exchange, then cancelled the trades and allocated them to the accounts of Morgan Stanley’s program trading desk.
They then re-filled the orders with the trades allocated to the desk accounts at prices less advantageous for the clients. Some trades were reallocated to clients at prices that exceeded the highest intra-day buy order price.
The cancellations and re-allocations involved more than 2,500 trades in 20 stocks, resulting in the clients paying a total of about $8 million ($1 million) more for their shares in 2009 and 2010 than they would have at the initial execution prices.
As the program desk supervisor, Ma was found to be responsible for the abuses, and as a team member Wong was involved in one of the clients paying close to $800,000 more than the initial execution price.
Morgan Stanley reported Ma and Wong’s conduct to the SFC and returned $8 million in cash or commission credit to the clients. It also reported that Ma’s employment was terminated in May 2011.
But the SFC said Ma had provided false or misleading information to his employer, resulting in the bank providing the same to the regulator.
During the investigation, Morgan Stanley reported that some of the trades were executed off-market because they couldn’t be fully executed on the exchange, and that the orders were fully covered by market purchases made on subsequent trading days.
But Ma had deleted and changed the time stamps and purchase quantities of the executed trades with a view to covering up the cancellation and reallocation of the executed trades.
Ma had applied for the Securities and Futures Appeals Tribunal to review the case, but eventually withdrew his request before the tribunal.
Ma and Wong were formerly licensed as representatives under the Securities and Futures Ordinance to deal in securities and futures contracts and provide automated trading services. The two are no longer licensed representatives.
Ma was accredited to Morgan Stanley Asia, Morgan Stanley Hong Kong Futures and Morgan Stanley Hong Kong Securities from July 1999 to May 2011, and Wong was accredited to the same entities from June 1995 to November 2011.
Ma’s ban will end on May 27, 2024 and Wong’s on May 29, 2016.