Lippo censured for malpractice
Lippo Securities has been publicly censured and fined by securities regulators for failing to adopt practices to safeguard client assets and failing to maintain sufficient liquid capital.
The Securities and Futures Commission and the Hong Kong stock exchange announced the action yesterday following an inspection by the commission in mid-1996.
It showed Lippo, part of the property and financial services empire controlled by the Indonesian-based Riady family, had adopted practices that were unable to adequately safeguard client assets.
This breached certain sections of the Securities Ordinance and the code of practice for brokers.
The regulators said Lippo was also found to have failed to maintain sufficient liquid capital, erred in computations under the Financial Resources Rules as at May 31, 1996, and failed to maintain books and records as required by the Securities Ordinance.
Regulators also reprimanded Lippo's two dealer's representatives Cheng Ka-wa and Ng Kwok-fung for signing as witnesses client account opening forms between February and November 1995 when the clients did not actually execute the forms in their presence.
They had also failed to establish the identity of each of their clients and their financial situations.
Apart from the reprimand, the exchange also fined Lippo Securities $30,000, while Mr Cheng and Mr Ng were each fined $7,000.
Both the commission and the exchange issued a warning letter to Lippo chairman and chief executive Peter Woo Ping in respect of the brokerage's deficiencies.
Mr Woo has transferred some of his previous functions within the Lippo group to other supervisory directors in a bid to appease the regulators.
In determining the disciplinary actions, the regulators said they took into account that no clients had suffered monetary loss.
Lippo had also appointed an independent auditor to review its internal control systems and had since implemented the recommendations.
Its holding company had also agreed to establish an audit committee to ensure the quality of financial information and the operational systems at the broker.