Hong Kong SFC Fines Chee Tak Securities $255,000 & Suspended Responsible Officer for 10 Months for Internal Control Failures & Regulatory Breaches, Failures Including 3rd-Party Deposits into Client Accounts, Suspicious Transactions, Order Recording Policy, Cross Trades Between Staff & Clients to Ensure Fair Treatment & Employee Dealings
20th September 2023 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has fined Chee Tak Securities $255,000 (HKD 2 million) and suspended Responsible Officer (Kevin Chiu Koon Yu) for 10 months for internal control failures & regulatory breaches, with failures including 3rd-party deposits into client accounts, suspicious transactions, order recording policy, cross trades between staff & clients to ensure fair treatment & employee dealings. Hong Kong SFC: “The Securities and Futures Commission (SFC) has reprimanded and fined Chee Tak Securities Limited (CTSL) $2 million for internal control deficiencies and a host of regulatory breaches. The SFC has also suspended the licence of its responsible officer Kevin Chiu Koon Yu for 10 months from 15 September 2023 to 14 July 2024. The disciplinary actions followed the SFC’s investigation which found that, between 1 July 2018 and 5 March 2020, CTSL failed to: 1) have in place an order recording policy and observe the order recording requirements; 2) implement effective internal controls to monitor cross trades between staff members and clients and to ensure fair treatment of clients; 3) establish and maintain an adequate and effective monitoring system to detect and assess suspicious transactions in client accounts; 4) set up systems and controls to identify and assess third-party deposits into client accounts; 5) require or obtain written third-party authorisation for the operation of client accounts; and 6) institute internal controls to monitor employee dealings.” See below for Hong Kong SFC statement:
“ Hong Kong SFC Fines Chee Tak Securities $255,000 & Suspended Responsible Officer for 10 Months for Internal Control Failures & Regulatory Breaches, Failures Including 3rd-Party Deposits into Client Accounts, Suspicious Transactions, Order Recording Policy, Cross Trades Between Staff & Clients to Ensure Fair Treatment & Employee Dealings “
Hong Kong SFC Fines Chee Tak Securities $255,000 & Suspended Responsible Officer for 10 Months for Internal Control Failures & Regulatory Breaches
18th September 2023 – The Securities & Futures Commission (SFC) has reprimanded and fined Chee Tak Securities Limited (CTSL) $2 million for internal control deficiencies and a host of regulatory breaches (Note 1). The SFC has also suspended the licence of its responsible officer Kevin Chiu Koon Yu for 10 months from 15 September 2023 to 14 July 2024 (Note 2). The disciplinary actions followed the SFC’s investigation which found that, between 1 July 2018 and 5 March 2020, CTSL failed to:
- have in place an order recording policy and observe the order recording requirements;
- implement effective internal controls to monitor cross trades between staff members and clients and to ensure fair treatment of clients;
- establish and maintain an adequate and effective monitoring system to detect and assess suspicious transactions in client accounts;
- set up systems and controls to identify and assess third-party deposits into client accounts;
- require or obtain written third-party authorisation for the operation of client accounts; and
- institute internal controls to monitor employee dealings.
The failures of CTSL constituted breaches of the Code of Conduct, the Internal Control Guidelines and the Circular to licensed corporations and associated entities – Third-party deposits and payments issued by the SFC on 31 May 2019 (Notes 3 to 5).
The SFC considers that CTSL’s failures were attributable to the failures of Chiu in discharging his duties as its responsible officer and a member of its senior management and called into question his fitness and properness.
In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including CTSL’s financial situation, CTSL’s cessation of business, CTSL and Chiu’s cooperation in resolving the SFC’s concerns, and their otherwise clean disciplinary record with the SFC (Note 6).
Notes:
- CTSL is licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) regulated activity.
- Chiu is accredited to CTSL and approved to act as its responsible officer for Type 1 (dealing in securities) regulated activity since 24 July 2004.
- Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
- Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission.
- Please refer to the Statement of Disciplinary Action for the relevant regulatory requirements.
- CTSL’s last day of trading was 31 July 2023.
A copy of the Statement of Disciplinary Action is available on the SFC website
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