Hong Kong’s SFC imposes HK$3.5m fine on FIL Investment Management for regulatory breaches
The violations include unlicensed dealing in futures contracts, delay in reporting the breach to the regulator as well as submitting incorrect information during an application.
Hong Kong’s Securities and Futures Commission (SFC) today announces that it has imposed a HK$3.5 million fine on FIL Investment Management (Hong Kong) Limited (FIMHK) for regulatory breaches including unlicensed dealing in futures contracts, delay in reporting the breach to the SFC as well as submitting incorrect information during an application.
According to the SFC’s findings, between August 2007 and July 2018, FIMHK executed 6,738 trades in futures contracts for its overseas affiliates with an aggregate transaction value of about US$39.7 billion without the required licence. FIMHK identified the suspected breach in a review conducted between May and June 2018 but only reported the incident to the SFC in August 2018, after it had obtained external legal advice.
The regulator also found that FIMHK, when applying to the SFC for a new fund authorization in March 2017, submitted an incorrect information checklist based on an outdated template. Due to this, certain required information was not completed or provided in the checklist submitted to the SFC.
The internal investigation conducted by FIMHK and the reviews performed by an independent reviewer engaged by FIMHK revealed certain deficiencies and weaknesses in FIMHK’s internal controls and systems, which suggest that FIMHK did not implement satisfactory and effective systems and controls to ensure the accuracy of information submitted to the SFC at the relevant time.
In determining the disciplinary sanctions, the SFC considered a variety of factors, including that:
- there is no evidence to suggest that FIMHK’s failures were intentional or deliberate;
- there is no evidence of clients having suffered any financial loss;
- FIMHK engaged an independent reviewer to review its internal controls in relation to the fund application process and took steps to rectify the deficiencies identified;
- FIMHK took remedial actions to strengthen its internal systems and controls;
- FIMHK co-operated with the SFC in resolving the SFC’s concerns; and
- FIMHK has an otherwise clean disciplinary record with the SFC.
