The Securities and Futures Commission (SFC) has banned Mr Philip Leung Ming Yin, a former account executive of HSBC Broking Securities (Asia) Limited (HSBC Securities), from re-entering the industry for six months from 17 March 2017 to 16 September 2017 (Note 1).
The SFC found that Leung used his mobile phone and messaging application WeChat to receive and confirm order instructions with nine clients between March and July 2015 without maintaining a proper record of the instructions as required by the SFC’s Code of Conduct (Note 2).
The SFC also found that Leung effected transactions in a client account on a discretionary basis from March to August 2015 without obtaining proper authorization from the client as required by the Code of Conduct.
Although the client had verbally authorized Leung to conduct discretionary trades in her account, he failed to obtain her written authorization. Furthermore, HSBC Securities’ internal policy does not allow its account executives to operate client accounts on a discretionary basis (Note 3).
The SFC considers Leung’s conduct exposed his clients to risks and his former employer to potential disputes arising from claims of unauthorized transactions in the client account.
In deciding the penalty, the SFC took into account that Leung has admitted and expressed remorse for his misconduct.
- Leung was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 3 (leveraged foreign exchange trading) and Type 4 (advising on securities) regulated activities and accredited to HSBC Broking Securities (Asia) Limited, HSBC Broking Futures (Asia) Limited and HSBC Broking Forex (Asia) Limited until 15 October 2015. Leung is currently not accredited to any licensed corporation.
- Paragraph 3.9(b) of the Code of Conduct for Persons Licensed by and Registered with the SFC (Code of Conduct) provides that where order instructions are received from clients through the telephone, a licensed person should use a telephone recording system to record the instructions and maintain telephone recordings as part of its records for at least six months.
Paragraph 3.9 of the Code of Conduct further notes that the use of mobile phones for receiving client order instructions is strongly discouraged. However, where orders are accepted by mobile phones, staff members should immediately call back to their licensed or registered person’s telephone recording system and record the time of receipt and the order details. The use of other formats (e.g. in writing by hand) to record details of clients’ order instructions and time of receipt should only be used if the licensed or registered person’s telephone recording system cannot be accessed.
- Paragraph 7.1(a)(ii) of the Code of Conduct provides that a licensed person is required to obtain written authorization from a client before he can effect transactions for a client without the client’s specific authorization.