The Securities and Futures Commission may take further action against brokerage Mansion House Group because of a HK$100 million connected transaction three years ago, according to a source from Hong Kong Exchanges and Clearing.
The transaction - unsecured loans to relatives of director Irene So Wai-yin without the approval of independent directors - was the subject of a public censure from HKEx last month.
Responding to the criticism that the exchange's punishment appeared too light, the source said: 'As a front-line regulator, that is the most we can do.'
But he said the SFC - the ultimate regulator - might take further action.
'A prosecution, for example, could be one possibility,' the source said, but only if the market watchdog could prove to the court that the parties concerned had deliberately acted other than in the interests of the company.
The loans were granted to four different accounts in the names of a brother and sister of Ms So, a former member of the stock exchange council, and their controlled companies in October 1998.
The deal was approved by a company board meeting, at which Ms So was present and voted, but no independent director was present. The loans were to cover huge losses incurred in margin-stock trading accounts with subsidiary Mansion House Capital.
