Based on SFC enforcement actions, I've noted that a RO would most probably be penalized for non-compliance incidents incurred by other staff if:
- There is no well documented compliance policy/procedure in place; or
- The compliance policy/procedure is not effectively enforced.
Yesterday SFC announced that it has suspended the licence of a RO (Steven Chan) of Peace Town Forex for 3 years. He holds a licence of Types 1, 2, 3, 4, 5, 6 & 9. This is quite a severe penalty. What happened?
As disclosed by SFC:
- PT Forex used a dormant company to fund commission payments to individuals carrying on leveraged FX trading without a licence.
- Chan knew about the arrangements and even suggested how they could be made to avoid suspicion.
- PT Forex continued the unlawful activity despite internal documents revealing the true nature of the payments.
I've heard that many firms had made use of similar arrangements to conceal the compensations for unlicensed dealing activities. This case may just be part of the iceberg.
Referring to the history of this RO, I noted that he had also been suspended by SFC for 2 years in 2002 for misconduct under the Takeover Code. For wilful contravention of law, a 3-year suspension should not be too harsh.
I however express my sympathy to ROs (not the particular one in this case) who are only employees of a LC.
ReplyDeleteThey, for making a living, have to please their bosses at own risk.
Despite their are demand in the employment market, there are cases that a person is unable to find a job (dont say that it it easier to reduce the pay expected).
The SFC is asking people occuping some positions to be the good citizens and Smaritans. Yet, those people are serving their bosses and receiving pay from them. How can one uphold objectivity or high ethical standard as a result? Should ROs or Compliance resign because they notice something wrong or to back-stag people of the company? They either keep their mouth shut or to lose their jobs.
I think the system should be remodeled. Perhaps the person to be put on trial shuold the owners of a LC (shareholders) rather than someone working there. Shareholders have the right to invest a company at their free will. Usually the pressure comes from the substantial shareholders (ie the real boss of the LC).