Hong Kong’s Securities and Futures Commission (SFC) has banned a former licensed representative of a well-recognised securities firm from re-entering the financial industry for three years.
The SFC’s investigation found the individual had conducted personal trades through accounts held by a relative and a friend without disclosing a beneficial interest. They had maintained these accounts at separate brokerages.
Between March and September 2023, the individual executed 109 matched or wash trades across nine stocks using their account and the accounts of others. The activity aimed to avoid forced liquidation due to potential margin calls, which could lead to a false sense of stock demand or price stability and other issues. The SFC also found that Law “intentionally concealed his beneficial interests and personal trades in those accounts”. These actions were in direct violation of the firm’s staff dealing policy.
The individual misrepresented the source of trading orders by confirming them over recorded phone lines and submitting signed instructions that falsely indicated the account holders initiated the trades. In one instance, they even impersonated the account holder to place a trade.
The SFC found the conduct to be dishonest and inconsistent with the expected standards. While there was no evidence of market manipulation and the individual had no prior disciplinary record, the regulator raised serious concerns about the individual’s fitness and properness to be licensed.
See the SFC’s announcement.
Firms face growing pressure from regulators to effectively monitor employee trading activity and detect red flags before they escalate into larger issues. However, manual monitoring processes are incredibly resource-intensive and can result in delayed response times or red flags that fall through the cracks.
Regulatory Technology (RegTech) platforms, such as MyComplianceOffice (MCO), enable firms to automate and enhance their oversight of employee trading activity. MCO’s Personal Trading Compliance module helps compliance teams leverage trading pre-clearances, proactively identify and reduce risks, and enforce firm-wide policies. The platform integrates brokerage feeds to centralise trade data and flag potential conflicts. Additionally, rules from MCO's Trade Surveillance solution can identify potential front running and tailgating situations.
MCO’s Representative Registrations and Licensing module helps firms track certifications and maintain compliance requirements across jurisdictions. It alerts teams to licensing gaps, supports timely renewals, and confirms that employees remain fit and proper for their roles.
By adopting such tools, firms can significantly improve compliance oversight, reduce risk, and stay ahead of evolving regulatory expectations.
Insider trading risk extends far beyond traditional misconduct. MCO’s in-depth article explores the range of insider trading schemes that can stretch across firms and markets. Discover why modern surveillance tools are essential for compliance teams aiming to detect, prevent, and respond to trading risks.
See MCO’s article, Managing Insider Information is the Key to Managing Trading Risk.