The Securities and Futures Commission in Hong Kong has reprimanded and fined SFM HK Management for failures relating to the short selling of shares in 2015 on behalf of a fund it managed.
Hong Kong's Securities and Futures Commission (SFC) has reprimanded and fined SFM HK Management $1.5 million for failures relating to the short selling of Great Wall Motor Company shares in 2015 on behalf of a fund it managed, according to a statement sent on Friday. The fund is controlled by Democratic mega-donor George Soros.
On 28 August 2015, Great Wall announced its proposed bonus issue of shares, which was equivalent to 200 per cent of its existing issued shares and was subject to the fulfilment of certain conditions. The settlement date of the bonus shares was expected to be on 13 October 2015.
No Adequate Controls
The SFC considers that SFM not only failed to act with due skill, care and diligence in dealing in the bonus shares, but also failed to diligently supervise its staff members and implement adequate and effective systems and controls to ensure compliance with the short selling requirements.
In deciding the sanctions against SFM, the SFC took into account all the circumstances including that
- there is no evidence to suggest that SFM had acted in bad faith in short selling the bonus shares;
- this incident is the second occurrence of a similar kind over a period of five years;
- SFM has taken remedial measures to strengthen its internal controls and systems; and
- SFM has an otherwise clean disciplinary record.
