SFC seeks administrator to return Tiffit shares
The Securities and Futures Commission will apply to the High Court to appoint an administrator to return shares to the 700 clients of troubled broker Tiffit Securities, the commission says.
The securities watchdog banned the broker from trading earlier this week, freezing its assets - including those held for its clients - after finding some investor shares had gone missing and the firm's financial position was unstable.
Clients whose shares are found to have been misappropriated will be able to apply to a compensation fund for a maximum payout of $150,000.
The Investor Compensation Company had received 174 inquiries and 169 claims from Tiffit clients by late yesterday afternoon, the SFC said.
The SFC said the broker had misled the securities watchdog by saying it had $1.59 million surplus capital in May when it had a $3.35 million deficit. It also found that the shares of six Tiffit clients amounting to $900,000 had gone missing as of July 14.
SFC staff met with Tiffit's owner Kwok Wood-yan on July 14 when Mr Kwok agreed to buy back the $900,000 worth of shares to return to his clients' accounts.
However, the SFC alleges that while Mr Kwok presented bank records showing that Tiffit had deposited $900,000 to cover its capital deficit, he withdrew the same amount the following day.
When confronted by the SFC, Mr Kwok admitted he withdrew the money because he expected the SFC to put a restrictive action on it.
'The commission considers that Kwok's actions calls into serious doubt his integrity... and his fitness and properness to remain licensed,' the SFC said.
Mr Kwok and another Tiffit official, Fong Shik-yee, had previously faced two disciplinary actions by the SFC - a reprimand in 2001 and seven months' suspension in 2004 for misconduct in 2003.
Shareholder activist David Webb, a director of Hong Kong Exchanges and Clearing, said the SFC had been 'far too lenient with Tiffit, Mr Kwok and Ms Fong'.
'This week's collapse could have been avoided if they had been banned from the industry in 2003 after the second offence, rather than given enforced holidays staggered to allow the firm to remain in operation,' he said.