The Hong Kong Securities and Futures Commission has fined Morgan Stanley Hong Kong Securities for internal control failures between 2010 and March 2016.
The Securities and Futures Commission (SFC) said it has resolved its concerns with Morgan Stanley Hong Kong Securities (MSHK) over its internal control failures. Under the resolution, the SFC reprimanded and fined MSHK $18.5 million for breaches of the Code of Conduct.
MSHK failed in a number of areas including, avoidance of conflicts of interest, comprehensive documentation of its electronic trading systems, disclosure of short selling orders, compliance with position limits and reporting of Large Open Positions and execution of client instructions in connection with futures and stock options contract reporting obligations.
Fine Could Have Been Worse
Among the specific internal control failures was the disclosure of 29,000 short selling positions between January and November 2014, the firm also failed to comply with position limits on its derivatives trading in February 2015 and to follow the instruction of an asset manager to report large open positions on a delegated basis from June 2012 to March 2016 the SFC said.
However in reaching this resolution, the SFC took into account that MSHK co-operated with the SFC in resolving regulatory concerns, agreed to engage an independent reviewer to conduct a forward-looking review of its internal controls to ensure compliance with the relevant regulatory requirements and the fact that MSHK has no disciplinary record in respect of the present failures.
