Watchdog bans director for misusing clients' money
Former stock exchange council member and Legislative Council candidate Irene So Wai-yin has been banned from working in the local financial markets for five years after being found guilty of a serious conflict of interest.
The securities watchdog found that between 1999 and 2002, when Ms So was a dealing director of Mansion House Securities and an executive director of the Mansion House Group, she had borrowed funds from her clients to finance operations of the two companies, which were in financial and regulatory difficulties.
'So's clients were not told that they were [lending] money to a company in financial difficulties,' the Securities and Futures Commission said yesterday.
It is the second time Ms So has been punished by the SFC over a conflict of interest. In 2001 she was banned from trading for nine months after it was found she had granted $100 million in unsecured credit facilities to her brother and sister from early 1997 to 2000.
On Monday, Ms So surrendered her licences in securities advising, corporate finance advising and asset management to the SFC and promised not to reapply for them until February 29, 2010.
Because it was a repeat offence, the SFC had originally wanted to revoke Ms So's licences, but she took that decision to the Securities and Futures Appeals Tribunal.
The appeal proceedings have since been withdrawn as part of the settlement that she surrenders the licences for five years.
Ms So is a key member of Mansion House Asset Management, the fund manager of Mansion House Hong Kong Trust, an SFC authorised fund.
The South China Morning Post yesterday contacted Dexia Trust Services Hong Kong, trustee of the fund, but an official refused to comment on how her leaving would affect investors.
Ms So was a member of the council of the Stock Exchange of Hong Kong from 1998 to 2000 when it was merged with the futures exchange and the three local clearing houses to form Hong Kong Exchanges and Clearing,
She also stood in the Legco election in 2000 for the functional constituency for financial services, but received only 21 votes, losing to Henry Wu King-cheong who won 177 votes.
In the most serious incident, the SFC found that she had borrowed a client's shares and pledged them to Mansion House Group's banker. The shares were subsequently sold without the client's consent.
'To date, the client has not been fully repaid, with $63.47 million outstanding as at the end of October 2003,' the SFC said.
Mansion House Group has agreed with the client to repay the money and an annual interest rate of 7 per cent in six batches from October 2003 to March 2007.
Alan Linning, SFC executive director of enforcement, said the conflict of interest may have been addressed if Ms So had informed her clients about the latest financial situation of her company and the risks involved in the borrowings.
'So was obliged to tell her clients of Mansion House Group's up-to-date financial position, and should not have expected them to rely on out-dated published accounts,' Mr Linning said.
