SFC recently reprimanded Mr Wong Ding Pong Allan, a responsible officer of South China Securities Ltd, and to Ms Yau Man Yuk Jabriel, a former financial controller of South China and fined them $65,000 and $93,000 respectively.
An SFC investigation that followed an inspection of South China found that the company:
- failed to maintain the required liquid capital on various dates between May 2002 to Oct 2003 (17 months) in breach of the Financial Resources Rules (FRR);
- failed to segregate clients' monies fully in accordance with Client Money Rules (CMR); and
- did not have in place adequate internal controls to ensure compliance with applicable laws and regulations.
As a responsible officer, Wong signed most of the FRR returns. He acknowledged it was his responsibility to supervise FRR compliance. Yau, as financial controller, had a role in ensuring South China complied with the FRR and CMR. More importantly, she arranged fund transfers that in fact caused South China's liquid capital deficiencies.
I wonder whether the Head of Compliance, who is also part of a licensed firm's management, would also be disciplined by SFC for not ensuring the adequacy of compliance procedures.
I was surprised when one compliance head said the compliance officer would not be penalised. Obviously he did not know he was a "regulated person".
ReplyDeleteThe definition of regulated person is so wide that, I think, it does cover the head of compliance.
This however is unfair. How can a compliance officer ensure everything is all right? (it is not necessary to talk about the expectation gap again here)
Compliance people, even slack ones, are there to do good things. Who will join the profession if disciplary action is a possibility?