Hong Kong’s securities regulator has reprimanded and fined Quam Securities Company and its responsible officer at the time, Calvin Chiu, HK$1.3 million for internal control deficiencies in handling accounts for clients from mainland China.
Date: May 20, 2011
Hong Kong’s securities regulator has reprimanded and fined Quam Securities Company and its responsible officer at the time, Calvin Chiu, HK$1.3 million (US$167,000) for internal control deficiencies in handling accounts for clients from mainland China.
A Securities and Futures Commission (SFC) investigation found system and control deficiencies in the firm’s handling of 279 mainland clients referred to it by mainland-based agents between December 2006 and July 2007.
In particular, the SFC said it found that: the firm’s staff had signed account opening documents for some of the mainland clients even though they had never met them; the firm failed to detect that 11 mainland clients had used the office address of an unlicensed mainland-based agent as their correspondence address; and the firm allowed mainland clients to deposit money into the personal mainland bank account of an employee of Quam Securities Company to facilitate funds transfer to Hong Kong.
As a result, the SFC said that not only did the firm fail to comply with know-your-client procedures, but also failed to implement appropriate measures to safeguard client assets.
In deciding on the sanctions, the SFC took into account various factors, including: the firm and Chiu co-operated with by accepting responsibility for the above breaches; there is no evidence of any dishonesty on its part or its senior management in its business activities; and the firm has agreed to engage an independent audit firm to review its internal controls system and account opening procedures.