Hong Kong SFC Bans BNP Paribas Private Banker from Industry for 27 Months, Pre-Signed Blank Trading Instruction Forms & False Call Reports
1st April 2022 | Hong Kong
Hong Kong Securities & Futures Commission (SFC) has banned former BNP Paribas Wealth Management Private Banker Kim Bum Suk for 27 months from the financial industry (29/3/22 to 28/6/24), for arranging client to pre-sign blank trading instruction forms and creating false call & meeting reports. HK SFC: “Kim operated a client account discretionarily without obtaining written authorization under the guise of pre-signed client instruction forms. To this end, he misled BNP by creating a false appearance that the instructions for buying and selling investment products originated from the client who was arranged to pre-sign blank client instruction forms and risk mismatch acknowledgement letters when in fact he was operating the account discretionarily. He adopted a similar practice with three other clients and asked them to pre-sign blank client instruction forms so that he could place trades for their accounts without having to inform them in advance. He also deceived BNP with false call reports that he had met or contacted the clients to give them investment advice and/or take order instructions from them when in fact he had not.” The disciplinary action came after an SFC investigation following a self-report from BNP Paribas and referral of findings from Hong Kong Monetary Authority (HKMA). In deciding the sanction, the SFC took into account all relevant circumstances, including Kim’s misconduct and breaches of BNP’s policies lasted for almost two and a half years, his admission of using pre-signed documents and causing the production of false call reports, as well as his otherwise clean disciplinary record.
“ Hong Kong SFC Bans BNP Paribas Private Banker from Industry for 27 Months “
Hong Kong SFC Official Statement
SFC bans Kim Bum Suk for 27 months
The Securities and Futures Commission (SFC) has banned Mr Kim Bum Suk, former relevant individual of BNP Paribas Wealth Management and BNP Paribas (collectively, BNP), from re-entering the industry for 27 months from 29 March 2022 to 28 June 2024 (Note 1).
The disciplinary action came after an SFC investigation following a self-report from BNP and referral of findings from the HKMA (Note 2).
The SFC found that from March 2015 to August 2017, Kim operated a client account discretionarily without obtaining written authorization under the guise of pre-signed client instruction forms.
To this end, he misled BNP by creating a false appearance that the instructions for buying and selling investment products originated from the client who was arranged to pre-sign blank client instruction forms and risk mismatch acknowledgement letters when in fact he was operating the account discretionarily.
He adopted a similar practice with three other clients and asked them to pre-sign blank client instruction forms so that he could place trades for their accounts without having to inform them in advance.
He also deceived BNP with false call reports that he had met or contacted the clients to give them investment advice and/or take order instructions from them when in fact he had not.
In doing so, Kim not only breached the regulatory provisions on the authorization and operation of discretionary accounts and suitability requirements under the Code of Conduct, but also circumvented BNP’s policies and procedures in relation to discretionary accounts and suitability (Notes 3 to 6).
The SFC considers that Kim is not fit and proper to be a regulated person as his conduct was deceptive and dishonest, and casts doubt on his character and reliability as well as his ability to carry on regulated activities competently and honestly.
In deciding the sanction, the SFC took into account all relevant circumstances, including Kim’s misconduct and breaches of BNP’s policies lasted for almost two and a half years, his admission of using pre-signed documents and causing the production of false call reports, as well as his otherwise clean disciplinary record.
Notes
- Kim was a relevant individual engaged by BNP Paribas Wealth Management and BNP Paribas from 4 December 2014 to 30 September 2016 and from 30 September 2016 to 29 March 2018 respectively, to carry on Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities under the Securities and Futures Ordinance. Kim is currently not licensed by the SFC or registered with the Hong Kong Monetary Authority (HKMA).
- The HKMA referred its findings to the SFC following an investigation into BNP’s self-report regarding the manner in which client instructions were handled by its staff.
- The risk mismatch acknowledgement letters allowed the trading of products with risk profiles which did not match with that of clients.
- General Principle 1 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct) requires a registered person to act honestly, fairly, and in the best interests of its clients and the integrity of the market, in conducting business activities.
- Paragraph 5.2 of the Code of Conduct provides that a registered person should, when making a recommendation or solicitation, ensure the suitability of the recommendation or solicitation for that client is reasonable in all circumstances, having regard to information about the client or which the registered person is or should be aware through the exercise of due diligence.
- Paragraph 7.1(a) of the Code of Conduct provides that a registered person should not effect a transaction for a client unless before the transaction is effected, (i) the client, or a person designated in writing by the client, has specifically authorized the transaction; or (ii) the client has authorized in writing the registered person or any person employed by it to effect transactions for the client without the client’s specific authorization. Further, paragraphs 7.1(c) and (d) of the Code of Conduct require a registered person to designate these accounts as “discretionary accounts”, and obtain senior management’s approval for opening these discretionary accounts.
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