SFC reprimands and fines Kingston $500,000

5 May 2015



The Securities and Futures Commission (SFC) has reprimanded and fined Kingston Securities Limited (Kingston) $500,000 for fitness and properness concerns (Notes 1 & 2).

The SFC found that on 19 January 2009, an employee of Kingston, while in Macao, opened accounts for 22 Macao residents and took orders and payment from these clients, who each bought one or three board lots of PCCW Limited (PCCW) shares (Note 3).

Since neither Kingston nor its employee involved was authorized by the Monetary Authority of Macao (AMCM) to conduct regulated activities, including opening securities accounts and taking orders for securities trading, in Macao, the conduct was in breach of the Financial System Act of Macao. In October 2014, the AMCM in its proceedings against Kingston made a final ruling to sanction and fine the firm MOP750,000 for its breach of the Financial System Act (Note 4).

Kingston’s conduct has raised the SFC’s concern over Kingston’s fitness and properness as an SFC-licensed corporation.

The SFC considers that Kingston’s contravention of the laws of Macao casts doubt on the firm’s reputation, character and reliability because as an SFC-licensed corporation, the duty of Kingston to demonstrate these qualities is not only restricted to conduct in the Hong Kong market. It is also imperative for Kingston to respect and comply with rules of relevant regulatory authority and laws of relevant jurisdictions, particularly those where Kingston conducts its business activities (Note 5).

The SFC issued a circular to intermediaries in January 2014 to remind them about their obligations when conducting cross-border business, including the importance of ensuring compliance with all relevant laws and obligations (Note 6).

End

Notes:

  1. Kingston is licensed under the Securities and Futures Ordinance to carry on business in Type 1 (dealing in securities) regulated activity.
  2. Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
  3. The transactions in question involved PCCW shares that were later voted in the shareholders’ meeting in early 2009 to consider the scheme of arrangement (scheme) proposing the delisting and privatisation of PCCW, and the scheme was subsequently withdrawn. 
  4. The conduct involving Kingston’s employee at the time contravened the Financial System Act of Macao (Decree-Law no. 32/93/M, 5 July 1993) because Kingston did not have any authorization to carry on such a business in Macao. The final ruling by AMCM on Kingston was approved by the Secretary for Economy and Finance of Macao.
  5. The SFC proceeded with its disciplinary action against Kingston following the final ruling by the AMCM in October 2014 against the firm.
  6. 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



Page last updated : 5 May 2015