SFC reprimands and fines Sincere Securities Limited $5 million for internal control failings

15 Aug 2019



The Securities and Futures Commission (SFC) has reprimanded and fined Sincere Securities Limited (SSL) $5 million for a series of internal control failings and regulatory breaches (Note 1).

The disciplinary action followed an SFC investigation into an investor’s complaint concerning the conduct of a former account executive of SSL.  The SFC found that SSL did not require its account executives to obtain clients’ written consent before transferring their funds maintained at SSL to their gold trading accounts opened with its associated company (Notes 2 & 3).

At the SFC’s request, SSL engaged an independent reviewer to conduct a review of its internal control systems and procedures.  The independent review and a separate review by the SFC identified deficiencies across 14 areas of SSL’s business operations and internal controls for the period between October 2015 and December 2016 (Note 4).

Examples of the deficiencies include:

The SFC considers that SSL’s systems and controls were inadequate and failed to ensure compliance with the applicable regulatory rules and requirements (Note 5).  

In deciding the disciplinary sanctions, the SFC took into account all relevant circumstances, including:

End 

Notes:

  1. Sincere Securities Limited is licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.
  2. The SFC had taken disciplinary action against the relevant account executive.  Please see the SFC’s press release dated 25 September 2017
  3. The associated company of SSL is Allied Victory Gold and Silver Investment Limited.
  4. The 14 areas of deficiencies include: (i) procedures and manuals; (ii) compliance surveillance programme; (iii) escalation policy; (iv) staff dealing activities; (v) discretionary trading; (vi) third-party authorization; (vii) handling of client funds; (viii) handling of client securities; (ix) client orders and dealing; (x) handling of returned mail; (xi) preparation and delivery of trading documents; (xii) customer due diligence; (xiii) credit and margin control procedures; and (xiv) books and records.
  5. Please refer to paragraph 6 of the Statement of Disciplinary Action for the relevant rules and regulations.

A copy of the Statement of Disciplinary Action is available on the SFC website



Page last updated : 15 Aug 2019