Officers from the organisation conducted personal trades which breached conflict of interest.
The Securities and Futures Commission has slapped a total of $1.2m on fund management company CN Capital Management Limited for a series of violations including the company’s failure to maintain effective compliance function on employee account dealing for which it was fined $1m, according to a press release.
The regulator also fined officers George Chan Yan Lee and Stephen Ng Wing Leung $100,000 each for conducting personal trades even though they are engaged in a fund management business which resulted in violations of requirements under the Fund Manager Code of Conduct as well as gave rise to a possible conflict of interest.
Chan and Ng conducted a total of 3,1888 personal trades without prior approval from the company. In 619 incidents, their personal investments were held for less than 30 days again without a designated officer’s prior written approval.
A total of 966 personal trades were conducted in the same stock and on the same day as the transactions conducted for the fund managed by CN Capital. In a breakdown, 346 of the trades were executed at a better price than the fund which resulted in total positive impact of $1.2m to Chan and Ng whilst 459 were executed at a worse price than the fund.
“It is apparent that CN Capital failed to have internal controls to ensure compliance with the personal account dealing requirements, in breach of paragraph 1.2(c) of the Fund Manager Code of Conduct,” the regulator noted although it was concluded that there was no client impact that arose from the dealings.
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