Hong Kong regulator sanctions ex-CICC investment consultant over WeChat app use

Maria Nikolova

The SFC considers Xu Tao breached the Code of Conduct and that this breach has called into question his reliability, reputation, and ability to carry out regulated activities competently.

The use of chat applications in the financial services industry has been subject to bans and heavy regulations in many jurisdictions across the globe. This regulatory approach has been adopted by Hong Kong authorities too. Today, the Hong Kong Securities and Futures Commission (SFC) has once again acted against the illegal use of chat applications.

The SFC announces that it has prohibited Mr Xu Tao, a former investment consultant of China International Capital Corporation Hong Kong Securities Limited (CICC), from re-entering the industry for four months. The ban will last until February 10, 2018.

Xu was licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 4 (advising on securities) regulated activities and accredited to CICC between September 2008 and October 2015. He is currently not licensed by the SFC.

The penalty is imposed over findings that Xu used his mobile phone and WeChat messaging application to accept order instructions from 13 clients between February and August 2015, in violation of the SFC’s Code of Conduct and the internal policies and procedures of CICC.

Under Hong Kong regulations, where order instructions are received from clients through the telephone, a licensed or registered 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 also states 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 action against Xu adds to previous sanctions imposed by the Hong Kong regulator with regard to illegal use of chat applications in the financial services industry. In March this year, for instance, SFC banned Philip Leung Ming Yin, a former account executive of HSBC Broking Securities (Asia) Limited (HSBC Securities), for six months over using his personal phone and WeChat to receive and confirm order instructions. The violations lasted between March and July 2015 without maintaining a proper record of the instructions as required by the SFC’s Code of Conduct.

In a similar action in December 2016, SFC prohibited Mr Poon Kin Lung, a former account executive of Phillip Securities (Hong Kong) Limited (Phillip), from re-entering the industry for two years over breaches of the SFC’s Code of Conduct. The SFC found that Poon had received order instructions from two clients via WhatsApp and mobile phone, but he had failed to keep a proper record of their instructions in accordance with Phillip’s internal policies.

Read this next

Digital Assets

FTX resumes salary payments to employees and contractors, except in Bahamas and Australia

“FTX also is making cash payments to selected non-U.S. vendors and service providers where necessary to preserve business operations, subject to the limits approved by the Bankruptcy Court. We recognize the hardship imposed by the temporary interruption in these payments and thank all of our valuable employees and partners for their support.”

Market News

Rishi Sunak’s reign in real data

After several weeks of Rishi Sunak’s appointment as the new Prime Minister, it is obvious that he has claimed quite the public support.

Digital Assets

CrossTower acquires BEQUANT to help crypto industry reset and consolidate

“We are stabilizing an industry with incredible promise; regaining trust; and rebuilding the future of finance.”

Retail FX

Plum launches crypto offering for EU residents

Plum has added crypto investing to its range of investment options in France, Belgium, Spain, and Ireland. Residents there will be able to buy and sell cryptocurrencies in their app with just a few taps, via services provided by Bitpanda.

Retail FX

FX/CFD and Crypto broker Quantfury launches fractional trading of stocks, ETFs, commodities

“Quantfury is advancing its unmatched trading and investing conditions further by making it even more affordable to Quantfurians out there. Fractional trading mode opens up more trading opportunities to the Quantfury global audience of more than 400,000 Quantfurians.”

Industry News

SEC awards $20 million to whistleblower despite degree of culpability and reporting delay

The Securities and Exchange Commission has awarded a whistleblower with $20 million for providing new and critical information that led to the success of an enforcement action.

Institutional FX

Tradesmarter’s white label WOW TRADER integrates with TradingView

Tradesmarter’s white label trading platform solution WOW TRADER has integrated with TradingView, the high performance and mobile friendly charting tool.

Industry News

ASIC loses fee overcharging case against Commonwealth Bank of Australia

“ASIC pursued this case because we believed CBA did not have robust compliance systems to ensure customers were being correctly charged. ASIC will carefully consider the judgment and continue to work to ensure large financial institutions charge fees correctly and put their customers first.”

Digital Assets

Kraken pays $362K fine for onboarding Iranian users

Cryptocurrency exchange Kraken will pay $362,158 to settle its civil liability for apparent violations of US sanctions on countries like Iran, the Treasury Department’s Office of Foreign Assets Control said.