SFC reprimands and fines BOCOM International Securities $19.6 million for internal control failures

20 Apr 2020



The Securities and Futures Commission (SFC) has reprimanded and fined BOCOM International Securities Limited (BISL) a total of $19.6 million for a range of regulatory breaches, including failures concerning the handling of third party fund deposits and the maintenance and implementation of a margin lending and margin call policy (Note 1).

BISL also failed to put in place adequate and effective controls to identify deposits made into client accounts by third parties, hence failed to ensure compliance with the Guideline on Anti-Money Laundering and Counter-Terrorist Financing and various provisions in the Internal Control Guidelines and the Code of Conduct (Notes 2 & 3).

Specifically, the SFC found that third party deposits made into client accounts in 2009, 2011 and 2015 by way of cheques and bank transfers were not identified until 2016.

Extensive deficiencies were also identified during the SFC’s review of BISL’s margin lending and margin call policy from December 2012 to November 2016, including failures to:

Moreover, BISL failed to ensure that:

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

End

Notes:

  1. BISL is licensed under the Securities and Futures Ordinance to carry on business in Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities) and Type 5 (advising on futures contracts) regulated activities.
  2. Management, Supervision and Internal Controls Guidelines for Persons Licensed by or Registered with the SFC and Code of Conduct for Persons Licensed by or Registered with the SFC.
  3. Details of the relevant regulatory requirements are set out in the Statement of Disciplinary Action.

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



Page last updated : 20 Apr 2020