The Securities and Futures Commission (SFC) has banned Mr Chan Hau Wing from re-entering the industry for two years from 13 July 2016 to 12 July 2018 for conducting unauthorized trades in a client’s account (Account) and acted contrary to the internal policy of Yue Xiu Futures Company Limited (Yue Xiu Futures) (Note 1).
The SFC’s investigation found that in the early hours of 8 February 2014, Chan was given a client order to buy 13 futures contracts in crude oil but he mistakenly placed a sell order. Instead of reporting the trading error to the management of Yue Xiu Futures in accordance to the company’s internal policy, Chan sought to reduce the trading loss by trading in the client account without any trading authorization from the client.
Chan did not report the matter to Yue Xiu Futures until the afternoon of 10 February 2014 after the client made enquiries with Yue Xiu Futures about the trades conducted in the Account.
Chan’s conduct, which fell short of the standard set out in the Code of Conduct, cast doubt on his fitness and properness to be a licensed person (Note 2).
In deciding the sanction, the SFC took into account all relevant circumstances, including that Chan had no previous disciplinary record with the SFC. The affected client had been compensated by Yue Xiu Futures.
Chan is licensed under the Securities and Futures Ordinance to carry on Type 2 (dealing in futures contracts) regulated activity and was accredited to Yue Xiu Futures until March 2014. Chan is currently not licensed by the SFC nor registered with the Hong Kong Monetary Authority.
General Principle 2 (diligence) of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) provides that a licensed person should act with due skill, care and diligence in conducting business activities. Paragraph 7.1 of the Code of Conduct provides that licensed person should not effect a transaction for a client unless before the transaction is effected the client, or a person designated in writing by the client, has specifically authorized the transaction.