NOTICE OF PUBLIC CENSURE
The Exchange announces that on 19 April 1999, the Disciplinary Committee heard the case of the Member, Ms Chan Yuen Yee ("Ms Chan") trading as Tai Shing Stock Investment Company, and found a charge against Ms Chan for breach of the Rules of the Exchange proved.
The substance of the charge proved against Ms Chan was that during the period 1993 to 1995:-
(i) Ms Chan's dealer's representatives used various nominee accounts at Ms Chan's business to conduct trading malpractices and short selling;
(ii) the dealer's representatives of other brokerages used various nominee accounts at Ms Chan's business to conduct trading malpractices;
(iii) Ms Chan's dealer's representatives facilitated trading malpractices conducted by dealer's representatives of other brokerages;
(iv) Ms Chan did not establish and maintain proper procedures in respect of dealing practices, record keeping, monitoring staff dealing, monitoring compliance with legal requirements relating to short selling, monitoring manual cross trades, ensuring registration of staff, ensuring the maintenance of proper account opening procedures and handling the movement of client assets; and
(v) Ms Chan was aware of the above trading malpractices and short selling activities and had facilitated these improper activities by signing settlement cheques in such a way as to allow the payee of the cheques to be altered, thereby facilitating the diversion of funds to dealer's representatives and others.
Having considered that Ms Chan : -
(i) had incorporated her business as Tai Shing Stock Investment Company Limited;
(ii) would voluntarily surrender her registration as a securities dealer for a period of three years;
(iii) had appointed, on a full-time basis, a person acceptable to the Exchange and the Securities and Futures Commission ("the SFC") to be a Dealing Director of Tai Shing Stock Investment Company Limited's business;
(iv) had taken effective measures to address the shortcomings in the business' operations as a result of various inspections by the Exchange and the SFC from 1995 to 1998; and
(v) had agreed to engage an independent firm of accountants acceptable to the Exchange and the SFC to perform a review of the business' systems and internal control procedures and to fully implement all recommendations that may be made in that report,
the Disciplinary Committee resolved that a penalty of public censure plus a fine of HK$40,000 be imposed on Ms Chan. The penalty of public censure is hereby imposed on Ms Chan.
For and on behalf of
The Stock Exchange of Hong Kong Limited
Fanny Chung
Secretary - Disciplinary Committee
Hong Kong, 15 June 1999
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