SFC found that for the purpose of operational convenience, CCL transferred approximately $44 million on about 180 occasions between Jan 2009 and Dec 2016 from its client accounts to pay monthly commission rebates to its account executives. The amounts involved in each transfer ranged from $249,000 to over $1 million.
CCL often replenished the shortfalls in the client funds days after the initial withdrawals from the relevant client trust accounts, and on one occasion it only replenished the shortfall 41 days after the withdrawal. CCL is unable to trace the exact time when such practice commenced, but the evidence suggests that the arrangement had likely prevailed for more than 20 years.
CSL effected payments totalling $40 million on 8 Jul 2015 from its client trust accounts into CCL's client trust accounts in an intra-day fund swap arrangement so that CCL could meet various margin calls from the HKEx on time.
CCL and CSL had failed to implement proper controls to safeguard client money and supervise its staff in handling it in that their accounting and treasury staff were effectively given a free reign in handling client money with little supervision, instructions or guidance.
How come the external auditors failed to detect the above malpractices for such a long period of time? Would the MICs of OCR and F&A be held accountable?
