Investor Education or Client Solicitation?

In recent years, there are so many "financial actors" working in intermediary firms but at the same time maintaining public exposures through media or investment courses. Their employers may not be able to adequately monitor their activities outside their employment.

SFC has recently banned Mr Law Chun Pon from re-entering the industry for 32 months and fined him $260,000. The case arose from complaints by Law's clients alleging improper trading of foreign exchange contracts by Law in the clients' accounts. SFC found that Law, while acting as an account executive of Delta Asia Credit Ltd (once a DTC regulated by HKMA):

• contravened the law by cold calling the students of his investment course and inducing them to trade leveraged foreign exchange contracts;
• improperly provided discretionary account services to his clients against his employer's policies; and
• failed to act in the interests of his clients by churning their accounts and holding simultaneously equal long and short positions in the same foreign exchange contracts without any reasonable justifications when trading for his clients.

In deciding to ban Law for 32 months, SFC considered the fact that he had caused his clients to suffer significant trading losses in a relatively short period of time. SFC also fined him $260,000 which is the profit he made from his (mis)conduct.

Many trainers of investment course actually aim at soliciting clients rather than providing investor education.