The Securities and Futures Commission (SFC) has reprimanded Kaiser Securities Limited (Kaiser Securities) and Kaiser Futures Limited (Kaiser Futures) (collectively referred to as Kaiser) and fined them a total of $1.7 million for conducting unauthorized financial activities in breach of the laws of Macau (Notes 1 & 2).
Kaiser Securities and Kaiser Futures were fined $1 million and $700,000 respectively.
The SFC found that between 2004 and 2011, Kaiser conducted securities business in Macau at the premises of Unified Securities (Macau) Limited (Unified) and provided services to clients in respect of their trading in securities, futures and options in the Hong Kong market in Macau through Unified contrary to Macanese law (Note 3).
The SFC considers the contravention of the laws of Macau has called into question the reputation, character and reliability of Kaiser Securities and Kaiser Futures.
In determining the penalty, the SFC took into account that:
- Kaiser conducted the unauthorized financial activities in Macau over a prolonged period of time and had profited from the activities;
- demonstrating sound reputation, character and reliability is fundamental to the fitness and properness of a licensed person;
- a clear message needs to be sent to the market that it is imperative for a licensed person to comply with all requirements of any regulatory authority and any local laws and regulations that are applicable to it;
- Kaiser had been fined by the Macau authority;
- Kaiser have an otherwise clean disciplinary record; and
- Kaiser co-operated in resolving these disciplinary proceedings.
The SFC issued a circular to intermediaries in January 2014 reminding intermediaries about their obligations when conducting cross-border business, including the importance of ensuring compliance with all relevant laws and obligations (Note 4).
Notes:
- Kaiser Securities is licensed under the Securities and Futures Ordinance (SFO) to carry on Type 1 (dealing in securities) regulated activity.
- Kaiser Futures is licensed under the SFO to carry on Type 2 (dealing in futures contracts) regulated activity.
- The conduct contravened the Financial System Act of Macau because Kaiser did not have any authorization to carry on such a business in Macau. In July 2013, the Monetary Authority of Macao announced the decision of the Secretary for Economy and Finance of Macau to sanction Kaiser for their breach of the Financial System Act. Kaiser Securities was fined MOP1,500,000 and Kaiser Futures was fined MOP150,000 by the Macau authority.
- Please see the circular titled ‘Regulatory Compliance regarding Cross-border Business Activities’ dated 28 January 2014.
- A copy of the Statement of Disciplinary Action in relation to the matter is available on the SFC website.