Hong Kong’s SFC recently reminded licensees, at the request of the Independent Commission Against Corruption (ICAC), to take note of the ICAC’s Sample Anti-Bribery Code of Conduct: SFC circular dated 13 February 2015. This is a timely reminder for SFC licence holders to consider whether their anti-bribery policies, procedures and compliance are adequate.
More generally, licensees can take this opportunity to remind themselves where the conflicts of interest exist in their businesses and to ensure they are handling them properly. In this article we describe some conflict of interest situations which frontline personnel may face and highlight some of the issues raised.
The basic obligation, set out in paragraph 10.1 of the SFC’s Code of Conduct, is that a licensee is prohibited from handling a transaction without:
Conflicts between licensees and clients:
A firm’s broker selection policy would normally require the submission of a declaration of conflict of interest form. A sample form for this purpose is available in Annex 3 of the ICAC’s sample code.
The client order should be given priority and filled completely before the licensed representative allocates any shares for his or the firm’s account.
Conflicts between employees and licensee:
The firm’s entertainment policy should cover these situations and should be complied with.
This may involve an offence under the Prevention of Bribery Ordinance and it may also be an offence to offer gifts or advantages for such purposes. Firms should adopt a gift policy and adopt procedures to monitor compliance.
Prohibited under paragraph 11 of the ICAC’s sample code.