SFC fines New-Alliance for code breach

The Hong Kong asset management firm failed to disclose interests in H shares but gets off lightly.
New-Alliance Asset Management has pleaded guilty to six summonses in relation to its failure to make both an initial disclosure of interests in a stock and subsequent disclosures when it increased those weightings.

New Alliance is a joint venture between New York-based Alliance Capital Management, a unit of Axa Financial, and Hong Kong developer Sun Hung Kai. Both parents also own stakes in a Taiwan securities investment trust company (Site) JV with Far Eastern Bank.

The Securities and Futures Commission prosecuted the firm under Part XV of the Securities and Futures Ordinance. New-AllianceÆs funds acquired a 5.29% interest in Shandong Weigao Group Medical Polymer on 18 February 2004 but didnÆt report this to the SFC. Nor did it report increases of its interest to 6.46% on 5 March or 8.13% on 8 March.

Augustus (ôAugieö) Cheh, CEO for Alliance Capital Management for Asia ex-Japan, declined to comment.

An SFC spokesman declined to discuss details of the case but notes that depending on the severity of a breach, the SFC can either issue a warning letter or decide to prosecute.

Josiah Lam, magistrate at Hong KongÆs Eastern Magistracy, fined New-Alliance HK$12,000 and ordered it to pay investigation costs of HK$13,876 to the SFC. That total equates to around $3,325, an amount that the SFC says is in line with similar penalties for breaching the SFO. The SFC says it considers this the end of the matter and has warned the firm about its obligations as a licensee to have adequate systems to comply with the law and regulations.
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