Hong Kong SFC Bans ex-COO of DA International Financial Service Wu Chao for 3 Years & 7 Months for Managing & Hiding Beneficial Interest of 3rd-Party Margin Account, Failed to Get Approval for $934,000 of Securities Transactions Executed by Him for the Account, Made 33 Unauthorised Adjustments to Margin Loan Limit & Financing Ratios
28th June 2024 | Hong Kong
The Hong Kong Securities and Futures Commission (SFC) has banned the ex-COO of DA International Financial Service Wu Chao for 3 years & 7 months from the industry for managing & hiding his beneficial interest of a 3rd-party margin account, failing to get approval for $934,000 of securities transactions executed by him for the account. Wu Chao had also made 33 unauthorised adjustments to the margin loan limit & financing ratios for the 3rd-party margin account. Hong Kong SFC (26/6/24): “The Securities and Futures Commission (SFC) has prohibited Mr Wu Chao, a former responsible officer, manager-in-charge (MIC) and chief operations officer of DA International Financial Service Limited (DA), from re-entering the industry for three years and seven months from 26 June 2024 to 25 January 2028. The disciplinary action follows an SFC investigation, which found that between February and April in 2022, Wu concealed from DA his beneficial interest in and that he had direct control or influence over a securities margin account held by a third party at DA. He also failed to obtain DA’s approval for the securities transactions conducted by him in the account. By doing so, Wu’s conduct circumvented DA’s employee dealing policy and prevented it from monitoring his personal trading activities. In all, the unauthorised transactions conducted in the account at the material time totalled $7.3 million. Wu also abused the right granted to him as a member of DA’s senior management. He made 33 unauthorised adjustments to the margin loan limit of the account and the margin financing ratios of certain callable bull / bear contracts (CBBCs) traded in the account. As a result, he was able to trade more CBBCs in the account and conceal the unauthorised adjustments from DA’s detection. The SFC considers that Wu’s conduct is dishonest and it calls into question his fitness and properness to be a licensed person … … Wu was accredited to DA and licensed to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities under the Securities and Futures Ordinance from 8 June 2016 to 1 April 2022 and 13 January 2012 to 1 April 2022 respectively. He was approved to act as DA’s responsible officer in Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities from 13 August 2019 to 1 April 2022 and 21 July 2016 to 1 April 2022 respectively. At the material time, he was also the MIC for key business line, operational control and review and risk management of DA. Wu is currently not licensed by the SFC.” A copy of the Statement of Disciplinary Action is available on the SFC website
“ Hong Kong SFC Bans ex-COO of DA International Financial Service Wu Chao for 3 Years & 7 Months for Managing & Hiding Beneficial Interest of 3rd-Party Margin Account, Failed to Get Approval for $934,000 of Securities Transactions Executed by Him for the Account, Made 33 Unauthorised Adjustments to Margin Loan Limit & Financing Ratios “
In deciding the sanction against Wu, the SFC has taken into account all relevant circumstances, including:
- his misconduct lasted for over a month involving 190 transactions;
- his admission in relation to his concealment of the trading activities and the unauthorised adjustments that he made in the account;
- a deterrent message needs to be sent to the market that the SFC does not tolerate deliberate circumvention of internal control policies by licensed individuals; and
- his otherwise clean disciplinary record.
Hong Kong SFC Bans ex-COO of DA International Financial Service Wu Chao for 3 Years & 7 Months for Managing & Hiding Beneficial Interest of 3rd-Party Margin Account, Failed to Get Approval for $934,000 of Securities Transactions Executed by Him for the Account, Made 33 Unauthorised Adjustments to Margin Loan Limit & Financing Ratios
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