Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has banned a former business development officer of Standard Chartered’s local business from re-entering the industry for three years after he was convicted of conducting unauthorised transactions.
The disciplinary action follows the criminal convictions of Lam Ki Fung and his mother. The watchdog found that, between April and December 2017, Fung made money transactions in clients’ accounts without their authorisation to meet his sales targets and tried to conceal his misconduct by tampering with clients’ contact information.
According to the complaint, the former executive opened payroll accounts at the bank for five customers procured by his mother. His mother then made money transfers – ranging from $80,000 to $200,000 – from her personal account into the five payroll accounts, with a view to improving her son’s work performance.
Lam subsequently reversed the transactions by transferring the same amounts from these payroll accounts back into his mother’s personal bank account without the knowledge of customers. He also falsified client instructions for the transactions.
As a result, SCB paid Lam an additional quarterly incentive after including in his performance assessment the monies his mother had transferred into the customers’ accounts.
The watchdog further stated that Lam did not act in the best interests of his client when he conducted the unauthorized transactions, breaching the General Principal 2 and paragraph 7.1 of the Code of Conduct.
In addition, Lam acted contrary to the internal policy of SCB, and his conduct also fell short of the standard set out in the Code of Conduct, casting doubt on his fitness to be licensed.
SFC tightens grip on banks
The SFC wants to send a strong message to deter others from committing similar offenses, the regulator said in today’s statement.
Earlier this year, Hong Kong’s securities regulator fined Citigroup’s local unit $45 million for serious lapses and deficiencies in its cash equities business from 2008 to 2018. The review looked into interactions with clients on transactions where Citi acted in a principal capacity, rather than just broking a transaction between different parties.
Further, the watchdog has launched disciplinary proceedings against some former senior managers at the bank, but it didn’t reveal their identity nor how many people were involved.
In that year, Citigroup’s Hong Kong trading desk fired eight traders and suspended three others after an internal investigation found that they had misled clients. The firing come in the wake of several investigations by the SFC, which found that Citi traders had taken the other side of client trades using the bank’s own balance sheet. The practice had effectively made Citigroup’s facilitation desk a principal in the trades, when the clients were told their trades would be executed on an agency basis, matching orders with those of other clients.
