HK regulator commences legal proceedings against AMTD Global Markets Limited

Hong Kong’s Securities and Futures Commission (SFC) has commenced legal proceedings asking the Court of First Instance to inquire into the circumstances of non-compliance by AMTD Global Markets Limited (AMTD, currently known as orientiert XYZ Securities Limited) and its former executives with the SFC’s notices in initial public offerings (IPOs)-related investigations.

The SFC’s investigations related to suspected employment of fraudulent or deceptive schemes and/or disclosure of false or misleading information in the IPOs of certain listed companies where AMTD was involved as bookrunner, lead manager and underwriter.

The former executives of AMTD, amongst others, are: Lo Chi Hang, former responsible officer (RO); Philip Yau Wai Man, former director and manager-in-charge (MIC); and See Hiu Lun, former emergency contact person and complaints officer.

The regulator issued notices to AMTD seeking records relating to, amongst other things, its work in those IPOs. However, AMTD did not fully comply with the notices.

The former executives of AMTD did not attend interviews as required after the SFC had issued them with interview notices.

If the Court is satisfied after an inquiry that AMTD and its former executives do not have any reasonable excuse for not complying with the SFC notices, it can order AMTD to produce the specified records and its former executives to attend interviews, and it can punish them as if they had been guilty of contempt of court.

HK watchdog fines Lion Futures Limited $2.8M for regulatory breaches

Hong Kong’s Securities and Futures Commission (SFC) has reprimanded and fined Lion Futures Limited (LFL) $2.8 million for failures in complying with anti-money laundering and counter-terrorist financing (AML/CFT) and other regulatory requirements between May 2017 and July 2019.

The SFC’s investigation found that LFL did not conduct any due diligence on the customer supplied systems (CSSs) used by five clients for placing orders during the material time. As a result, LFL was not in a position to properly assess and manage the money laundering and terrorist financing and other risks associated with the use of CSSs by its clients.

In addition, the SFC found that LFL’s failure to put in place an effective ongoing monitoring system to detect suspicious trading patterns in client accounts resulted in its failure to detect 1,098 self-matched trades in five client accounts.

The regulator considers that LFL’s systems and controls were inadequate and ineffective, and failed to ensure compliance with the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML Guideline) and the Code of Conduct.

In deciding the disciplinary sanctions against LFL, the SFC has taken into account that LFL’s failures to diligently monitor its clients’ activities and put in place adequate and effective AML/CFT systems and controls are serious as they could undermine public confidence in, and damage the integrity of, the market.

LFL has taken remedial measures to enhance its internal systems and controls for continuous monitoring and identifying suspicious transactions.

The regulator noted that a strong deterrent message needs to be sent to the market that such failures are not acceptable.

LFL cooperated with the SFC in resolving the SFC’s concerns.