The Securities and Futures Commission (SFC) of Hong Kong has issued a fine of $2.1 million to Roofer Securities Limited due to violations regarding the management of client funds. This action follows an investigation prompted by a referral from The Hong Kong Exchanges and Clearing Limited (HKEX).
The SFC’s evaluation revealed that from February 8, 2021, to July 7, 2022, there were twelve instances in which Roofer did not maintain adequate funds in its segregated client account. Notably, on one of these occasions, the deficit reached a staggering $15.5 million.
The causes behind these discrepancies included the improper use of client account funds to fulfill margin calls imposed or expected from HKEX, ineffective management of daily online banking limits, and human errors made by employees of Roofer.
The watchdog concluded that Roofer’s actions represented violations of both the Client Money Rules and the Code of Conduct, leading to the imposition of disciplinary action.
Several factors influenced the determination of the imposed penalty. It was noted that no clients experienced financial loss due to Roofer’s mishandling of funds. Additionally, the firm has undertaken significant remedial measures, including enhancements to its internal controls and correcting the issues surrounding the under-segregation of client money promptly after each incident. Roofer’s willingness to cooperate with the SFC in addressing and rectifying these concerns, as well as its clean disciplinary history, were also important considerations in shaping the outcome of the case.
The penalty serves as a reminder of the importance of strict compliance with financial regulations and the management of client assets by financial firms. Instances of mishandling client funds can lead to severe repercussions, both financially and in terms of reputation. The SFC’s actions underscore its commitment to ensuring that client money is treated with the utmost care and integrity, helping to maintain trust in the financial system.