The SFC has fined RHB Securities $6.4 million for failures related to conflicts of interest and supervision of account executives.
2 January 2020 | AtoZ Markets – Hong Kong’s SFC (Securities and Futures Commission) has reprimanded and fined RHB Securities Hong Kong Limited HKD 6.4 million (USD 822,000) for failures to comply with regulatory requirements.
RHB Securities fined for other lapses
The disciplinary action, announced Thursday, followed an SFC investigation that found RHBSHK failed to:
- Effectively implement its policy for avoiding actual and potential conflicts of interest between its research reports and investment banking relationships;
- Adequately disclose its investment banking relationship with the listed company covered in a research report; and
- Effectively monitor the trading activities of its research analysts.
Moreover, RHBSHK did not have adequate controls to supervise its account executives.
“The frequency and extent of its sample checking procedures for ensuring that client orders received by account executives through telephone are tape-recorded are not commensurate with the size of RHBSHK’s business,” the SFC said. “
As a result, the discretionary trading activities without the written authorization of an account executive went undetected for 23 months.”
In deciding on the disciplinary sanctions, the SFC said it considered all relevant circumstances, including RHBSHK’s failures, were not detected until an SFC inspection; steps to remediate its internal control deficiencies, and cooperation with the SFC to resolve the disciplinary proceedings.
SFC stepping up compliance actions
Furthermore, the Hong Kong regulator has been stepping up their compliance actions to enforce anti-money laundering rules. Last year, December 30 precisely, the SFC fined and reprimanded FIL Investment Management, the arm of US asset manager Fidelity Investments, HK$3.5 million ($450,000) for regulatory breaches between August 2007 and July 2018.
Additionally, the regulator fined UBS, Morgan Stanley, Bank of America Merrill Lynch and Standard Chartered a total of HK$786.7m. The SFC also blocked UBS from sponsoring initial public offerings (IPO) for a year.
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