HK Brokers To Face Harsher Penalties For Lax Internal Controls

by Mary Swire, for LawAndTax-News.com, Hong Kong

24 May 2004

Hong Kong's Securities and Futures Commission (SFC) last week announced that it will be imposing harsher penalties on brokers in the territory who demonstrate lax internal controls.

Under the Securities and Futures Ordinance, regulations which came into force last month permit the regulator to fine brokers, and suspend or revoke part of their business.

Speaking on Thursday, SFC executive director, Alan Linning explained that the Commission had reprimanded brokers for failings in their internal control systems many times in the past, but that it continued to come across such cases, and observed that: "It appears that reprimands are proving to be an inadequate deterrent."

He went on to add that:

"In future, in cases of internal control and supervision failings facilitating serious misconduct harming clients, the SFC will consider imposing heavier sanctions. In the most severe cases, we will consider suspending a brokerage's licence for a long period or even revoking it."

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