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.