The Hong Kong Securities and Futures Commission (SFC) recently sanctioned a former chief executive officer of China Rise Securities Asset Management Company and suspended its head of dealing for inappropriate standards of conduct and breaching of the Code of Conduct.
The prosecutors found that the two senior managers had exploited the company lack of internal controls, neglected regulatory requirements, and breached their duties as senior managers. The regulator acknowledged the firm lack internal control and attributed to its senior managers’ failure to discharge their duties and ability to act in the best interest of its clients and market integrity.
In this case, the firm failed to:
- implement sufficient internal controls to detect and prevent illegal short-selling activities by its staff
- ensure fair treatment of clients in the light of its lack of internal controls to monitor cross-trades between its staff members and clients which gain rise to conflicts of interest
- report direct business transactions to the Stock Exchange of Hong Kong Limited
The SFC also fined China Rise Securities Asset Management Company Limited $6.3 million for regulatory breaches and internal control failures. Short-selling, internal control deficiencies and lack of regulatory surveillance can lead senior managers and firms to similar sanctions.
Join Niall Coburn, Regulatory Intelligence Expert Asia Pacific at Thomson Reuters and Kelly-Ann McHugh, Director Asia Pacific at MCO for a discussion about this case and insights in how to better implement controls to detect conflicts of interest and prevent market abuse. The agenda includes:
- Overview and Analysis of China Rise Securities Asset Management Case
- Securities & Fund Market Conduct Regulation and Enforcement in APAC
- The role and responsibilities of Senior Managers
- How firms and individuals should be protecting themselves avoiding conflicts of interest
- Q&A Session
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