On 30 Aug 2021, SFC announced that it suspended Mr Cheung Man Chit, a former licensed representative of Emperor Securities Limited and Emperor Futures Limited (collectively, Emperor), for two years. The facts are summarized below.
Submission of false client documents and information to Emperor
- Cheung received two sets of client agreements from Client L and H in around Aug 2013 for the opening of Client L's accounts at Emperor, but submitted to Emperor the one received from H. Further, he falsely certified and claimed to have witnessed Client L's signing of the submitted client agreement.
- In around Jan 2014, Cheung received three payment forms authorising fund transfer from Client L to H, one from Client L and two from H. He submitted to Emperor the two payment forms received from H and not signed by Client L, one of which resulted in the $300,000 Transfer which Client L alleged was not authorised by her.
- He handled and submitted to Emperor six other account documents of Client L which were not signed by her between Nov 2013 and Jun 2014.
- Cheung provided his own addresses, and an email address he created, to state as the residential addresses and email address of another client (Client Y) in her client agreement and a change of particulars form which he submitted to Emperor.
Transfer of funds for clients
- Between Jun 2014 and Jan 2017, the accounts of Client Y and another client (Client C) at Emperor recorded transfers totalling around $3.2 million to/from Cheung's bank account or the bank account of a company solely owned by him (Company U) on 15 occasions. Ten of the 15 transfers were made pursuant to third party deposit/payment request forms (Third Party Forms) of the clients signed by Cheung as the handling account executive.
- Cheung admitted that he helped the clients transfer money to/from the Mainland using his and Company U's bank accounts, and claimed that he did not receive any benefit for transferring money for the clients. He accepted that the money transferred from the Emperor accounts of the clients had been mingled with the money in his and Company U's bank accounts.
- To secure Emperor's approval of the third party fund transfer requests of the clients and get around the need to provide supporting documents required under the firms' then policy, he falsely stated in the clients' Third Party Forms that they were directors of Company U, he and Client C were business partners, and the reason for payment was capital recovery by Company U.
- Client C opened an option account at Emperor in May 2014. Based on the records of internet service providers, 84 orders were placed in her option account via internet from IP addresses subscribed by Cheung or situated at the offices of Emperor and his new employers between Jun 2014 and Aug 2017.
- Cheung stated that he placed orders for Client C via internet as a friend and did not receive any personal benefit from her. Client C only paid commission to Emperor for the trades.
- Cheung has been the sole proprietor of Company U and the director of another company since their incorporation in around 2010 and January 2018.
- He did not report to SFC his directorship and proprietorship of the two companies in his licence application and throughout the period when he was licensed with SFC.
- Cheung did not notify Emperor of his proprietorship of Company U during his accreditation with the firms pursuant to their internal policy.
- In terms of variety, severity and duration of Cheung's misconducts, licence suspension of two years seems too lenient.
- Emperor's account opening, trading and settlement procedures had been abused by Cheung. The relevant internal controls and monitoring should be strengthened.
