Warning delivered for SFC breach
A PUBLIC reprimand has been dealt to Christfund Securities and Christopher Cheung Wah-fung by the Securities and Futures Commission (SFC).
After accepting responsibility for breaches of a SFC notice, Christfund agreed to pay $1.5 million towards investigation costs and Mr Cheung has agreed to leave the securities industry for 10 months.
Christfund accepted responsibility for breaching a SFC restriction notice and failing to keep a complete audit trail identifying the client in certain Wai Yick trades.
Mr Cheung accepted responsibility for not supervising Christfund properly in respect of the breaches and for allowing his name to be used by others in the structure of a $10 million loan by Wai Yick.
Christfund and Mr Cheung agreed to a series of conditions including an audit of Christfund prior to September 30, 1996, to check systems and if internal controls are adequate.
They also agreed that over the next two years Christfund would employ a dealing director and a compliance officer, both of whom must be acceptable to the SFC.
In mitigation, the SFC accepted that Mr Cheung had co-operated with the commission in its work and that he had been in the industry for 20 years without regulator blemish. It also noted there were no actual losses or complaints from clients with respect to the SFC investigation.
Christfund issued a statement saying staff changes had been made since the investigation and independent accountants had been employed to review the company's internal system and control.
'The inquiry involved, directly or indirectly, matters relating to certain former clients of Christfund which traded with Christfund from 1991 to 1993 as well as the adequacy of certain internal systems and controls,' the company said.
During this period Christfund was cited in investigations into activities and share dealings or the corporate affairs of Allied Group and former Allied Group companies.