AT LEAST five United States investment banks are under investigation by the Securities and Futures Commission (SFC) for using unlicensed brokers to sell financial products in Hong Kong.
The SFC has uncovered multiple cases of US banks employing unlicensed salesmen which puts them in breach of Hong Kong securities law, a senior finance industry source said.
The first instance uncovered by the SFC was Smith Barney Shearson, where US securities were allegedly being sold to Hong Kong investors by a sales operation which had no licensed dealing directors.
Subsequently, at least four other US firms were found to be employing unlicensed brokers: '[They were] those who established or expanded aggressively in Hong Kong last year,' the source said.
Smith Barney Shearson's position was said to be particularly serious because senior executives of the firm had allegedly misled the SFC after they were instructed to change their trading operation.
The SFC investigation resulted in Smith Barney Shearson firing its dealing director Raymond Lai in August. A Smith Barney Shearson spokesman declined to comment.
