The Securities and Futures Commission (SFC) has revoked the licences of Union Securities Limited (Union Securities) and its two responsible officers, Mr Ma Kin Chung and Ms Cheng Tai Ha. Ma and Cheng have also been prohibited from re-entering the industry for life (Notes 1 & 2).
An SFC investigation found that Union Securities, with the involvement of Ma and Cheng, misappropriated approximately $400,000 from two clients who thought they were depositing those moneys for settlement of orders.
Under the term of its licence, Union Securities was prohibited from holding client assets and was required to place all orders with an execution broker. The funds were deposited into an account controlled by Ma in the name of Union Securities’ predecessor which Ma had represented to the SFC to have been ceased to be used. Bogus statements were then issued to the two clients (Note 3).
Ma and Cheng fled Hong Kong in late 2012 and Union Securities’ premises were vacated (Note 4).
The investigation also found that Union Securities provided false and/or misleading information to the SFC by omitting an overdraft in its financial returns submitted under the Securities and Futures (Financial Resources) Rules.
Due to the default of Union Securities, clients may lodge claims to recover their losses with the Investor Compensation Company Limited (Note 5).
Notes:
- Union Securities, Ma and Cheng are licensed under the Securities and Futures Ordinance (SFO) to carry on Type 1 (dealing in securities) regulated activity. Their licences were suspended on 11 April 2013.
- Union Securities’ licence is subject to various conditions, including that it shall not hold client assets and conduct business other than communicating offers to effect dealings in securities to an execution broker, Topmore Securities Limited, in the names of the persons from whom those offers are received; and introducing persons to Topmore Securities Limited, in order that they may effect dealings in securities or make offers to deal in securities.
- The predecessor, Union Securities Co, was licensed under the SFO to carry on Type 1 (dealing in securities) regulated activity. It ceased to be licensed with the SFC in October 2005.
- The names of Ma and Cheng have been placed on the SFC’s website alongside those who are the subject of arrest warrants or whom the SFC considers to have important information that may assist in other enforcement inquiries.
- The SFO provides for the establishment of the Investor Compensation Fund (ICF) which is established to pay compensation to investors of any nationality who suffer pecuniary losses as a result of default of a licensed intermediary or authorized financial institution in relation exchange-traded products in Hong Kong. The Investor Compensation Company Limited is recognised by the SFC to administer the ICF and process the claims, and is responsible for receipt, determination and payment of compensation relating to defaults of licensed intermediaries and authorized financial institutions occurring on or after 1 April 2003.
- A copy of the Statement of Disciplinary Action in relation to the matter is available on the SFC website.