Hong Kong SFC Issues Restriction Notices to Two Brokerages

Hong Kong’s SFC says it issues restriction notices to two brokers, prohibiting them from dealing with or processing certain assets held in five trading accounts.

August 11, 2020 | AtoZ Markets – Hong Kong’s Securities and Futures Commission (SFC) on Tuesday announces that it has issued restriction notices to two brokerages – Gary Cheng Securities Limited (GCSL) and Zhongcai Securities Limited (ZSL).

What does the restriction notices prohibit the brokerages from dealing?

The notices prohibit the brokerages from dealing with or processing certain assets held in five trading accounts. These accounts, however, are linked to suspected market manipulation in late April 2020 in the shares of a company listed on the Stock Exchange of Hong Kong Limited.

The restriction notices prohibit them, without the SFC’s prior written consent, from disposing of or dealing with, or assisting, counseling or procuring another person to dispose of or deal with, any assets in any way in the trading accounts including:

  1. entering into transactions in respect of any securities; and/or

  2. processing any withdrawals or transfers of securities and/or cash or any transfers of money arising from the disposal of securities; and/or

  3. disposing of or dealing with any securities and/or cash on the instructions of any authorized person of the accounts or any person acting on their behalf.

The Hong Kong watchdog also requires the brokerages firm to notify them if they receive any of these instructions.

The SFC says the restriction notices is desirable in the interest of the investing public and in the public interest. Moreover, the SFC’s investigation into this matter is continuing.

SFC increases market supervision

During the 2019-20 financial year, SFC imposed fines totaling $479 million during 2019-20 for intermediary misconduct. Since October 2013, the regulator took disciplinary action against 11 sponsoring companies and fined a total of $922.5 million.

The regulator initiated 197 investigations, made 10 criminal charges against 6 individuals and 1 corporation, and convicted 3 people. The regulator also fine $400 million a company on inflating customers for 10 years. It was due to widening spreads after trading, excessive fees, and inadequate internal controls. Mr Ashley Alder, the SFC’s Chief Executive Officer, said:

“Our unwavering commitment to competence, independence, impartiality and public accountability is the foundation of the SFC’s work. In the years ahead, concerted global action on the part of regulators and the industry will be essential to address the formidable challenges we face.”

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