DAO Heng Securities has been publicly reprimanded by the Securities and Futures Commission (SFC) after staff were able to sell $2.6 million worth of client shares for personal gain. A Dao Heng Securities spokesman said there was no official comment from the company. But he did say: ''These events date back to 1991. Those people involved have been replaced now and in fact the individuals who sold the shares have disappeared.'' The SFC launched an investigation into Dao Heng Securities, part of the Guoco Group created out of Dao Heng Bank and Hang Lung Bank in 1990, after clients found they were unable to get back $2.46 million worth of shares purchased through Dao Heng. In a statement last night the SFC said: ''The shares were released by Dao Heng Securities to one of the company's staff and a person apparently associated with that member of staff, neither of whom were authorised by Dao Heng's clients to handle their shares.'' The shares, said the SFC, had subsequently been sold by that staff member through other brokers. The SFC said: ''Dao Heng Securities only compensated clients' losses in April 1992, six months after the first complaint was lodged to Dao Heng Securities.'' Following its investigation, the SFC concluded that Dao Heng had failed: to implement proper control and settlement systems to prevent misappropriation of scrip by its employees; to put in place procedures to handle clients' complaints in an effective, efficient and timely manner; to discharge its functions as a dealer effectively, efficiently and fairly. An SFC spokesman said: ''In summary the brokerage did not have controls in place to sufficiently monitor the shares. Once the shares were gone they did not have a means of handling the complaints once the clients realised there was a problem.'' The SFC said it had decided to reprimand the brokerage under Section 56 of the Securities Ordinance. The SFC statement said: ''In deciding the penalty, the commission took into consideration the fact that Dao Heng Securities eventually compensated clients' losses in full and has taken steps to enhance its operational and control systems to prevent a recurrence of the activities complained of. ''The commission expects registered intermediaries to act efficiently, fairly and honestly in carrying on their businesses at all times and will take active steps to ensure that such standards of behaviour are maintained.'' Following the implementation of the Hongkong Securities Clearing Company (HKSCC) Central Clearing and Settlement System, the danger of defective scrip entering the market is constantly being reduced. The continuous netting system introduced last year is designed to reduce the risk of securities not owned by the vendor being fraudulently sold. Through the immobilisation of scrip in a central depository held under an HKSCC nominee, scrip ownership can be more effectively monitored and the danger of using ''street'' names on scrip is expected to die out. Street name shares were commonly used in the 1980s because it took so long to register shares. Nominal names were used instead of the investor's own name, and scrip would go through several trades without a re-registration of scrip taking place. The SFC spokesman said the regulator rarely used public reprimands in such cases. The revocation of licences was more common following an investigation by inspectors. Guoco is Hongkong's fourth largest bank in terms of its number of outlets, with 49 branches. In March 1992 the group took a 49 per cent interest in Hoare Govett Asia. It bought British group Benchmark Bank in July of the same year. On March 8 this year the group announced a 52 per cent rise in net profit to $210 million for the six months to December 31 with earnings per share up 18.46 per cent to 63 cents. An interim dividend of 20 cents was announced.