Parking of Licenses

Since the exam regime was introduced in HK securities industry, maintenance of a license with SFC (or registration with HKMA) by individuals has become necessary even if they are unemployed. If you have quitted the industry for more than 3 years, you are required to take the licensing exam again. SFC and HKMA are sensitive to those "dormant" licensees or registrants.

NASD recently fined 4 Boston-based Fidelity broker-dealers for improperly maintaining NASD registrations and other failures. One of them is Fidelity Distributors Corp (FDC), the principal underwriter of Fidelity family of mutual funds. FDC permitted certain employees hired by the investment adviser FMR Co. to "park" NASD licenses they held prior to joining Fidelity - even though they did not perform any functions for the broker-dealer.

NASD further found that the 4 Fidelity broker-dealers improperly maintained registrations for 1,100 individuals who did not perform jobs for which an NASD licence is required or permitted. They effectively gave those individuals the ability to re-join a brokerage firm at a later time without the re-testing required of those who are unregistered for two or more years. In addition, they failed to assign registered supervisors to 1,000 registered individuals and ensure that the individuals complied with NASD rules.

Other failures included:

• Some FMR Co. investment advisor traders whose licenses parked at FDC received excessive gifts and entertainments from employees of brokerage firms who sought business from FMR Co. FDC failed to monitor such conflicts of interest circumstances.
• The Fidelity broker-dealers failed to retain emails of all registered individuals as required by NASD rules.

I am sure that parking of licenses is also a problem happened in HK.