SFC Settles its Disciplinary Action with Sinomax Securities Limited and Luk Kam

The SFC considers that it is in the public interest and to the interests of investors to settle its disciplinary actions against Sinomax Securities Limited and its responsible officer, Mr Luk Kam (Notes 1 and 2).

According to the settlement agreement, Sinomax accepts the SFC’s reprimand in relation to Sinomax’s failures in: (i) the prevention and detection of unregistered dealing in securities (Note 3); (ii) properly communicating to its staff its requirement to verify client identity; (iii) maintaining adequate funds in clients’ segregated accounts: (iv) obtaining written directions for transferring client monies; (v) implementing an effective tape recording system.

Sinomax’s responsible officer, Luk, agrees to make a voluntary payment of $40,000 and admits that he was negligent in failing to detect and prevent unregistered activities.  The SFC will pay the sum to the government revenue.

In agreeing with the settlement, the SFC has taken into account Sinomax and Luk’s co-operation, including by settling the SFC’s disciplinary action, and admission, in particular, Mr Luk’s remorse for his failure.  The SFC also notes that Sinomax’s clients did not appear to have suffered pecuniary loss as a result of Sinomax’s failures and that Sinomax has since strengthened its internal controls.

Mr Alan Linning, SFC’s Executive Director of Enforcement, said: “Unlicensed dealing puts client assets at risk and jeopardises the integrity of the licensing system.  Brokers and their management should supervise their staff closely and diligently so that improper or illegal activities committed by their staff are detected at an early stage.  Strong internal controls should help early detection of improper activities and these will enable appropriate remedial action to be taken.”

Ends

Notes:

1. Luk Kam is a representative licensed under the Securities and Futures Ordinance in Type 1 (dealing in securities) regulated activities. Luk is the responsible officer for Sinomax Securities Limited.

2. Sinomax Securities Limited is a corporation licensed under the Securities and Futures Ordinance to carry on business in Type 1 (dealing in securities) regulated activities.

3. Chan Siu Tung was earlier convicted of unlicensed dealing.  Please see press release dated 4 February 2004 for details.