Bright Smart Fined for Advertisement with False/Misleading Information

On 29 July 2014 SFC announced that it fined Bright Smart Securities International (H.K.) Limited ("BSSI") $700,000 for allowing an advertisement which contains false/misleading information to be published.

The advertisement, published in four newspapers and on BSSI's website (www.bsgroup.com.hk) from 27 August to 14 September 2013, gave the false impression that the gold bullion business of Bright Smart Securities and Commodities Group Ltd ("BS Group", listed on SEHK) is regulated and that Bright Smart Global Bullion Limited ("BS Bullion") is regulated by SFC. In fact, gold bullion business is not a regulated activity under SFO, and BS Bullion is not licensed by SFC.

The advertisement's wording:

"坊間金業冇皇管, 上市耀才有監管 !

(耀才金業為上市大行耀才證券全資附屬, 受證監監管)" 

Translation: 

"The gold bullion business in the market is not regulated, but the listed company, BS Group, is regulated!

(BS Bullion is a wholly owned subsidiary of a large listed company BS Group, [and is] regulated by SFC)"

I would say this "misleading" advertisement is a borderline case. First, BS Group, though not a licensed corporation, is regulated by SEHK and SFC as a listed company. Second, the bracketed sentence may be arguably interpreted as saying that BS Group (instead of BS Bullion) is regulated by SFC! But of course, such ambiguous wording could make the public to perceive that BS Bullion is regulated by SFC, thus deserving a disciplinary action.

Interestingly, immediately after SFC's announcement of this sanction, BSSI published a newspaper advertisement (which "thank" SFC for the reminder) as "crisis management":

Actually this is not first time BSSI was penalized by SFC for providing false/misleading information to the public:

• In 2004, SFC reprimanded and fined BSSI for publishing 13 statements in two newspapers, which stated incorrectly that clients of BSSI could make direct payment to CCASS for settlement.
• In 2005, SFC reprimanded and fined BSSI for posting misleading contents in a newsletter on BSSI’s website in June 2004, which stated that one of the duties of BSSI’s customer services officers was to provide investment analysis. It held the customer services officers out as performing Type 4 regulated activity when three of them were unlicensed.

I just wonder if BSSI has the internal procedure of asking its compliance officers to vet their newsletters/advertisements.

Enhanced Competency Framework for Private Wealth Management Practitioners

HKMA recently announced the launch of an Enhanced Competency Framework (ECF) for private wealth management (PWM) practitioners in Hong Kong.

HKMA said it has led a Task Force, comprising representatives from the newly established Private Wealth Management Association (PWMA), Hong Kong Institute of Bankers (HKIB), Hong Kong Securities and Investment Institute (HKSI), and Treasury Markets Association (TMA), in developing the ECF.  Industry consultation on the ECF was completed in 2013, with general support from the industry.

The ECF is a non-statutory framework that sets out an enhanced level of core competence and on-going professional development of PWM practitioners who undertake customer-facing roles.  New entrants and relevant industry practitioners may meet the ECF benchmark by self-study and / or taking accredited training programmes, and passing examinations.  The training programmes and examinations will consist of two modules: Module 1 on technical, industry and product knowledge, and Module 2 on ethics and compliance.  Providers of the initial programmes and examinations will be HKSI for Module 1 and HKIB for Module 2.  The PWMA will be responsible for certifying qualified practitioners as Certified Private Wealth Professional (CPWP).

Following the financial tsunami, the professionalism of PWM practitioners has been severely criticized.  I had read the ECF consultation paper and found the contents of the CPWP programmes quite comprehensive and advanced.  The ECF is expected to serve as a benchmark of competency for private bankers, but how about PWM practitioners not working in the banking sector?  I don't see SFC has formally given any acknowledgement or blessing on the ECF, seemingly it is a single-handed project of HKMA, though HKMA's circular about the ECF was copied to SFC.

My questions:

• Can PWM practitioners licensed by SFC also complete the CPWP programmes and obtain SFC's recognition?
• Can other PWM related professional qualifications, like CFA, CWM, etc., get any exemption from the CPWP programmes?

Without covering all PWM practitioners (from banks and non-banks) in Hong Kong, I am afraid the ECF is only "a small circle game".