SFC Takes Disciplinary Actions Against Polaris Securities (Hong Kong) Limited, Tsoi Kap and {X}

The Securities and Futures Commission announces today that it has reprimanded Polaris Securities (Hong Kong) Limited (Polaris), a dealer registered under the Securities Ordinance (SO), and has suspended the registration of Mr Tsoi Kap (Tsoi), its dealing director, under the SO for a period of 3 months. It has also publicly reprimanded {X}, a dealer's representative of Polaris.

The action stemmed from a number of complaints received by the SFC about the activities of staff of Polaris, including some of its senior staff, between late 2000 and early 2002. The complaints made and subsequent investigations revealed:

The SFC found that Tsoi, as a dealing director of Polaris responsible for its day-to-day operations, bore direct responsibility for the failings identified above in the internal controls and procedures at Polaris and for failing to properly supervise staff under his direct control. In addition, Tsoi had also facilitated the opening and operation of a nominee account for one of his clients during the period from early 2001 to March 2002. The SFC views Tsoi's conduct in this matter very seriously and considers that an immediate suspension of his registration is appropriate in the circumstances.

The SFC also found that from March 2000 to June 2001 {X} had allowed a third party to operate 21 client accounts without proper written authorization being obtained. Furthermore, the SFC established that he had knowingly dealt in securities for an employee of another registered person without having first sought the written consent of that other registered person, contrary to the Code of Conduct for Persons Registered with the SFC.

In deciding on the appropriate penalties in this case, the SFC has taken into account that:

Alan Linning, Executive Director of Enforcement, said: "A broker firm must establish and maintain an effective management and organizational structure which ensures that its operations are conducted in a sound, efficient and effective manner with due regard to the interests of its clients and to the integrity of the market. Facilitating the use of a nominee account and allowing third parties to operate client accounts without written authorization is unacceptable behaviour for registered persons. The SFC will have no hesitation in taking disciplinary action against members of management or staff of firms and firms themselves should they fail to discharge their obligations in this regard."