Hong Kong’s Securities and Futures Commission (SFC) has banned a former fund manager for nine months for breaching his employer’s trading policies over a five year period by concealing his trading activities in two securities trading accounts at an external brokerage firm.
The SFC considered that the fund manager’s conduct in circumventing his employer’s internal control policies was dishonest and deliberate, calling into question his fitness and properness to be a licensed person.
The SFC does not appear to have had any issues with the trades themselves – they do not seem to have given rise to conflicts or disadvantaged clients. However, the fund manager’s concealment of his interest in or control over the accounts cast doubt on his integrity and undermined his employer’s compliance systems.
Personal trading policies are not to be avoided as an inconvenient burden. They are there for a purpose – to enable licensed entities to identify and prevent undesirable trading practices such as front-running, rat-trading, illegal short selling and insider trading. They also provide an employer with information on the extent of an employee’s personal trading volume, which may give rise to concerns regarding the employee’s devotion of due time and attention to the affairs of the employer.