Hong Kong's Securities and Futures Commission (SFC) has agreed for the first time to accept a monetary settlement in order to end a disciplinary action against one of the territory's senior brokers.
In a statement released on Thursday, the SFC revealed that Raphael Blot, head of SG Securities' equity derivatives sales department, had agreed to pay the regulator $750,000 in order to settle a market manipulation case dating back to 1998.
According to the SFC:
"On 19th November 2003 the SFC determined that Mr. Blot’s licence...should be suspended for the period of six months by reason of his use of “placing schemes” from October 1998 to May 1999 in order to meet the placing requirements of the former 15A.67 and Appendix 6A, of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Ltd. The Listing Rules were amended to remove these requirements with effect from 10th December 2001. The SFC refers to its announcement dated 7th June 2001 in this regard."
"Mr. Blot appealed the SFC’s decision to the Securities and Futures Appeals Tribunal and was granted leave by the High Court to judicially review the SFC’s decision. Both these sets of proceedings have now been withdrawn as part of a compromise between the SFC and Mr. Blot on the basis that Mr. Blot pays HK$750,000 to the SFC, without admitting any liability and Mr. Blot’s licence will not be suspended. The SFC will pay the sum to the government revenue."
Although such settlements are common practice in the United States, this is the first such agreement in Hong Kong, and has prompted calls for clarification from the territory's other brokerages and financial institutions.
Speaking to the South China Mornig Post on Friday, chairman of the Hong Kong Stockbrokers Association, Henry Chan Ming-yun urged the SFC to make clear the circumstances under which brokers can seek a monetary settlement in lieu of legal action, arguing that:
"The SFC should treat all brokers in a fair and equal manner."
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