The Securities and Futures Commission (the “SFC”) suspends a Responsible Officer
On 10 June 2021, the SFC suspended the licence of Mr Lun Sheung Nim, a responsible officer (“RO”) of GEO Securities Limited (GEO), for 7.2 months from 10 June 2021 to 16 January 2022.
Upon investigation, the SFC found that GEO had breached its licensing conditions including the GEO shall not conduct business other than (i) communicating offers to effect dealings in securities to a corporation that is licensed by or registered with the SFC for Type 1 regulated activity and (ii) introducing persons to a corporation that is licensed by or registered with the SFC for Type 1 regulated activity in order that they may effect dealings in securities or make offers to deal in securities.
Mr. Lun had allowed GEO to provide discretionary account management services to clients and introduce clients directly to listed companies to subscribe for their unlisted bonds during the material period. Hence Mr. Lun contributed to GEO’s breach of the conditions on its licence.
Besides, Mr. Lun also showed a fundamental failure to understand and properly manage the risks associated with GEO’s business.
In particular, Mr. Lun failed to:-
- Properly understand and manage GEO’s business;
- Understand his duties as a responsible officer and a member of GEO’s senior management;
- Properly manage the risks associated with GEO’s business, including its regulatory risk; and
- Implement adequate procedures and controls to ensure the maintenance of appropriate standards of conduct in relation to GEO’s sale of unlisted bonds to clients.
In light of the above, the SFC is of the view that Lun’s conduct was contrary to:-
- General Principle 2 of the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct), which requires a licensed person to act with due skill, care and diligence and in the best interests of the client and integrity of the market;
- General Principle 9 of the Code of Conduct, which requires senior management of a licensed corporation to bear primary responsibility for ensuring the maintenance of appropriate standards of conduct and adherence to proper procedures; and
- Paragraph 14.1 of the Code of Conduct which requires senior management of a licensed corporation to properly manage the risks associated with the firm’s business.
A copy of the Statement of Disciplinary Action is available on the SFC’s website.
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