The Hong Kong Exchanges and Clearing made an unusual move to announce the hire of a new chief executive officer before obtaining approval from the Securities and Futures Commission.
Nicolas Aguzin was named CEO of the Hong Kong bourse but approval from the Securities and Futures Commission (SFC) was notably missing, according to an «SCMP» report citing unnamed sources.
The SFC’s 14-member board met yesterday to discuss Hong Kong Exchanges and Clearing's (HKEX) pick and concluded that it would tell the local government that due diligence would be conducted on Aguzin to determine if he is «fit and proper» for the appointment.
Protocol Broken?
According to section 70 of Hong Kong's Securities and Futures Ordinance, the HKEX nomination of a CEO requires SFC’s approval in writing.
The HKEX’s appointment of Charles «Mr. China» Li on June 3, 2009, was accompanied by an announcement that claimed that SFC had approved the choice but the latest announcement noted that Aguzin’s hire would be subject to approval by the SFC.
According to another unnamed source in the report, the plan was to follow standard protocol but a decision to issue the announcement was made after Aguzin’s move to the exchange was reported by the media.
Regulatory History
Aguzin joined J.P. Morgan’s Asia unit in December 2012 in the midst of a corruption scandal where its Hong Kong-based bankers set up a referral program to hire well-connected Chinese princelings in order to secure business.
The «sons and daughters program» allegedly ran from 2006 to 2013 and the bank subsequently agreed to pay $264 million to settle an investigation into the matter by the US Department of Justice. J.P. Morgan’s ex-vice chair of Asian investment Catherine Leung was charged in 2019 by the local anti-graft commission for her involvement but she was acquitted just earlier this month.
Separately, the Hong Kong Monetary Authority also slapped a HK$12.5 million ($1.6 million) fine on the American bank in late 2018 over claims that it violated multiple anti-money laundering and counter-terrorist financing provisions between April 2012 and February 2014.
