SECURITIES & FUTURES COMMISSION

The Securities and Futures Commission (SFC) announced today that it had publicly reprimanded K.K.M. Securities Limited (KKM), its dealing director, Mr Wong Mo Kit Bernard (Bernard Wong), and two of its dealer's representatives, Ms Au Yeung Tung Yiu Eleanor (Au Yeung) and Ms Wong Yun Ha (YH Wong), under the Securities Ordinance.

The action stemmed from an investigation in which it was found that a dealer's representative and a settlement clerk of KKM had extensively dealt with client assets without authorization in different periods between February 1996 and May 1998 causing losses to clients in excess of $6 million. The registration of that dealer's representative has already been revoked as a result.

In the course of its investigation, the SFC also found that:

• there were no adequate supervision of the settlement clerk and proper segregation of duties in respect of settlement matters;
  
• the settlement clerk was able to perform both the dealing and settlement functions in respect of his unauthorized trading through clients' accounts;
  
• there was no proper control over the access to KKM's computer system which allowed unauthorized access to amend transaction records;
  
• there was no proper control over the keeping and issuing of trade documents such as contract notes; and
  
• account executives were allowed to handle settlement matters for their clients without proper authority.

The above deficiencies in KKM's internal controls and supervision had facilitated the misconduct of its staff. Bernard Wong, who was the dealing director responsible for managing the day-to-day operation of KKM, had the direct responsibility for the above matters. YH Wong, who was the account executive for some of the clients concerned, allowed the settlement clerk to perform the dealing function whilst unregistered. Au Yeung, who was the immediate supervisor of the settlement clerk, failed to properly supervise his activities. Accordingly the SFC concluded that the fitness and properness of KKM, Bernard Wong, Au Yeung and YH Wong as registered persons had been impugned.

In deciding upon this course of action, the SFC took into account that :

• KKM had commissioned an accountancy firm to conduct a comprehensive review of its internal control system;
  
• KKM had significantly improved its internal controls following the review; and
  
• KKM had compensated the clients who suffered financial losses as a result of the misconduct of its staff.

For further information, please contact Susanne Ho at 2840-9470 or Yue Sin Yui at 2842-7605.

© Copyright 1996-2006 irasia.com Ltd. All rights reserved. Tel: (852) 2831-9792.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.