SFC fines Yuanta Securities $4 million

1 March AtoZForex, Lagos – Hong Kong’s securities and Futures Commission (SFC) has taken a tough stance against the activities of Yuanta Securities (Hong Kong) Company Limited (Yuanta Securities). The SFC fines Yuanta Securities a large sum, due to its failures regarding appropriately reporting the actual execution price and disclose of the financial gains it made, whilst handling bond transactions for its clients.

The SFC fines Yuanta Securities $4 million for its failures, as they are regarded as a serious oversights. Especially, since Yuanta securities is a licensed firm under the Securities and Futures Ordinance. The firm is authorized to carryout securities dealing, dealing in futures contract, leveraged foreign exchange trading, advising on securities, advising on futures contracts, advising on corporate finance as well as asset management.

Illicit earnings

Being a licensed dealer, the SFC requires that such firms should provide an appropriate note, explaining information such as the price of the securities, the rate or amount of commission and charges payable in respect of the transaction. In the case of Yuanta securities, it was discovered that between 1 July to 31 December 2012, the firm earned about $3.1 million in commissions, in its capacity as a clients’ agent. The regulator discovered that these earnings came about via “marking-up or marking-down the execution prices in some of the 256 bond transactions for 96 clients without making proper and accurate disclosure to the clients.”

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Yuanta Securities failed to:

  • Properly avoid and disclose conflicts of interest and treat its clients fairly or act in their best interests;
  • Provide accurate information to the clients regarding the actual execution price and the full extent of the fees or charges it made in respect of the transactions; and
  • Set out the actual execution price and the commission and charges in the daily statements sent to clients as required under the law

Although, some clients seemed to be aware of the amount of commission they were being charged. These commissions were not always properly disclosed instruction form and was not mentioned in the daily statements sent to the clients. In addition, some clients were charged extra fees, without being dully informed.

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