SFC bans Chak Tsz Hoi for life

4 Mar 2014



The Securities and Futures Commission (SFC) has banned Mr Chak Tsz Hoi, a former employee of Bank of East Asia, Limited (BEA), from re-entering the industry for life (Note 1).

On 13 June 2011, Chak was convicted by the District Court on 23 counts of obtaining access to a computer with dishonest intent. He was sentenced to imprisonment of 10 months (Note 2).

Between May and June 2008, Chak altered the data entered in BEA’s equity derivatives trading system in order to conceal the losses in his equity derivatives transactions for BEA. After the data was corrected, BEA estimated its unrealised losses from Chak’s unexpired equity derivatives transactions to be approximately $80 million as at 30 June 2008 (Note 3).

The SFC considers Chak not a fit and proper person as a result of his convictions. 

The case was referred to the SFC by the Hong Kong Monetary Authority. 

End

Notes:

  1. Chak was a relevant individual engaged by BEA to carry on Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities under the Securities and Futures Ordinance (SFO) from August 2005 to September 2008. Chak was also licensed by the SFC as a representative of East Asia Securities Company Limited to carry on Type 1 (dealing in securities) regulated activity and of East Asia Futures Limited to carry on Type 2 (dealing in futures contracts) regulated activity under the SFO from October 2005 to September 2008. Chak is currently not registered with the Hong Kong Monetary Authority or licensed by the SFC.
  2. Please see the Reasons for Sentence (DCCC1358/2010) which is available on the Judiciary’s website (www.judiciary.gov.hk).
  3. Chak was required to create a folder in BEA’s equity derivatives system for each stock option he traded for BEA and to input the strike price, expiry date and conversion ratio into the folder. The conversion ratios for Hong Kong stock options must be set at “1”, which means one stock option is convertible to one lot of the underlying stock. Between May and June 2008, Chak changed the conversion ratios in 57 folders from “1” to “10”. As a result, the theoretical value of the stock options was reduced to one-tenth of the actual theoretical value. In July 2008, Chak changed the conversion ratios back from “10” to “1”.


Page last updated : 4 Mar 2014