Hong Kong trader spared jail for shorting violation
09 January 2017 Hong Kong
Image: Shutterstock
A Hong Kong-based trader has avoided jail after being reprimanded for uncovered short selling violations.
Hong Kong’s Securities and Futures Commission (SFC) issued a fine of HKD 50,000 (USD 6,500) to a Core Pacific–Yamaichi International employee for breaching the code of conduct in relation to illegal short sales of shares of China Agri-Products Exchange.
The SFC found that Chang Chyi told a customer that shares allocated by China Agri-Products through a rights issue could be sold before 4:00 pm on 21 March 2014, without violating the short selling restriction under section 170 of the Securities and Futures Ordinance.
The customer placed an order to sell 320,000 rights shares and bonus shares that were subject to conditions until 4:00pm on 21 March 2014 and could not be sold at that time.
Illegal short selling is a criminal offence in Hong Kong. it carries a maximum penalty of a $100,000 fine and two years is in prison.
In a statement, the SFC said: “Chang did not have an adequate understanding of the short selling restriction and had failed to take reasonable steps to verify the date on which the relevant rights issue would become unconditional.”
“In deciding the sanction, the SFC considers that Chang’s misconduct had subjected the customer to legal and regulatory risks and fell short of the standard expected of a licensed representative under the Code of Conduct.”
Hong Kong’s Securities and Futures Commission (SFC) issued a fine of HKD 50,000 (USD 6,500) to a Core Pacific–Yamaichi International employee for breaching the code of conduct in relation to illegal short sales of shares of China Agri-Products Exchange.
The SFC found that Chang Chyi told a customer that shares allocated by China Agri-Products through a rights issue could be sold before 4:00 pm on 21 March 2014, without violating the short selling restriction under section 170 of the Securities and Futures Ordinance.
The customer placed an order to sell 320,000 rights shares and bonus shares that were subject to conditions until 4:00pm on 21 March 2014 and could not be sold at that time.
Illegal short selling is a criminal offence in Hong Kong. it carries a maximum penalty of a $100,000 fine and two years is in prison.
In a statement, the SFC said: “Chang did not have an adequate understanding of the short selling restriction and had failed to take reasonable steps to verify the date on which the relevant rights issue would become unconditional.”
“In deciding the sanction, the SFC considers that Chang’s misconduct had subjected the customer to legal and regulatory risks and fell short of the standard expected of a licensed representative under the Code of Conduct.”
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