Hong Kong Regulatory Authority

SFC condemns Guosen Securities (HK) (Hong Kong) Brokerage Co., Ltd. violated regulatory requirements and was fined $2.8 million December 21, 2022 The Securities and Futures Commission (SFC) reprimanded Guosen Securities (HK) (Hong Kong) Brokerage Co., Ltd. (Guoxin) and fined $2.8 million because Guoxin breached regulatory requirements in handling client assets and providing client account statements (Note 1). The SFC's investigation found that between January 1, 2021 and March 7, 2021, Guoxin relied on the expired standing authorizations of 1,009 clients to re-pledge their securities collateral to a bank as collateral in order to obtain financial facilities. The SFC also found that between May 2020 and November 2020, Guoxin provided incomplete and incorrect monthly statements to 930 clients. Guoxin's omissions violated the Securities and Futures (Client Securities) Rules (Client Securities Rules), the Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules (Contract Notes Rules) and the Code of Conduct (Notes 2 and 3). In deciding to take the above disciplinary action, the SFC has taken into account all relevant circumstances, including: Guosen has taken remedial actions for its violations of the Client Securities Rules and the Contract Note Rules and has proactively reported them to the SFC; The above incidents appear to be isolated incidents; There is no evidence that Guosen’s regulatory violations have caused losses to clients; and Guosen has cooperated with the SFC to resolve the SFC’s concerns and accepted its investigation findings and disciplinary actions. End Note: Guosen is licensed under the Securities and Futures Ordinance to carry on business in regulated activities of Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (providing advice on securities) and Type 5 (providing advice on futures contracts). Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. The relevant disciplinary action statement is posted on the SFC website last updated on December 21, 2022.