Chan executed nine bond transactions for two clients in Mar 2016, she failed to disclose and/or provided them with inaccurate information about the final execution prices and/or the actual commission rates she charged them. She also overcharged them in these transactions.
Further details are disclosed in the SDA:
- During the regular sample checking of the telephone recordings of the trades executed by its RMs, BOCIS found that in 9 bond transactions Chan executed for the clients from 1 Mar 2016 to 23 Mar 2016, Chan charged them higher commission rates than had been previously agreed with them.
- According to the clients, they agreed with Chan that BOCIS could charge them a commission of 0.2% of the execution price in bond transactions executed on their behalf. The clients were not willing to pay any commission rate higher than 0.2% as had been agreed with BOCIS.
- Audio-recordings of the telephone conversations between Chan and the clients' representative show that during the price quotation stage:
- Chan quoted the best available prices to the clients' representative for the 9 bond transactions.
- Chan either expressly told the clients' representative that there would be a mark-up of 0.2%, or did not correct the clients' representative when he expressed his understanding that there would be a mark-up of 0.2%, or indicate to him that the mark-up might change.
- When the 9 bond transactions were executed at a better price, Chan unilaterally increased the mark-up without informing the clients' representative of the increase and seeking his consent to charge a higher mark-up for the transaction. Chan failed to disclose, and/or provided inaccurate, information to the clients about the actual execution prices and the actual commission rates charged by her, and overcharged the clients commission by 0.2% to 0.8% in the 9 bond transactions.
