In a recent enforcement action, the Securities and Futures Commission (SFC) has fined and banned an individual who was the senior management of a Type 9 licensed asset management company from engaging in regulated activities for HK$400,000 and 12 months.
The individual was a substantial shareholder, director, and former manager-in-charge of core functions (MIC) of a Type 9 licensed management company. Between August 2018 and July 2021, the individual was the investment manager and/or consultant for sub-funds of a Cayman-incorporated fund. At the material time, the individual was responsible for approving borrowing agreements on behalf of the sub-funds and implementing internal control procedures for the purpose of preventing money laundering and terrorist financing. However, the SFC’s investigation revealed that the individual had failed to properly discharge the duties as the licensed corporation’s director and MIC for Anti-Money Laundering and Counter-Terrorist Financing in managing those funds.
The SFC’s action against the individual was related to its ongoing disciplinary proceedings against another entity connected to the management of the aforementioned funds. The details of the action against the individual will only be disclosed until the conclusion of the SFC’s proceedings against the other entity. Whilst the individual was not a licensed person with the SFC, according to section 194(7) of the Securities and Futures Ordinance, the individual is considered as a “regulated person” as the individual was involved in the management of the business of a licensed corporation. This case serves as a reminder of the importance of implementing proper oversight and risk management in the asset management industry. It also stipulates that regulated entities and their key personnel (i.e. both licensed and non-licensed senior management) must ensure compliance with all relevant laws and regulations to maintain the integrity of the financial markets.
