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SFC reprimands and fines Ewarton Securities Limited $1.5 million

Issue date: 2021-05-27 16:37:55

The Securities and Futures Commission (SFC) has reprimanded and fined Ewarton Securities Limited (Ewarton) $1.5 million for internal control failings and breaches of the SFC’s Code of Conduct (Notes 1 to 3).

The disciplinary action follows the SFC’s sanctions against Mr Mung Wai Sun, a former licensed representative of Ewarton, for effecting transactions in a client’s account on a discretionary basis without obtaining the client’s prior written authorization and failing to ensure transactions undertaken on behalf of the client were given priority over orders for his own account between May 2017 and March 2018 (Note 4).

The SFC’s investigation found that Ewarton’s failure to diligently supervise Mung and to put in place adequate and effective internal controls during the material time resulted in its failure to detect and prevent his unauthorized or improper activities and to ensure that orders of clients were given priorities over orders of its employees.

In deciding the sanction, the SFC took into account all relevant circumstances, including the duration of Ewarton’s failures and the need to send a deterrent message to the industry that such internal control failures will not be tolerated.

End

Notes:

1. Ewarton is licensed under the Securities and Futures Ordinance to carry on Type 1 (dealing in securities) regulated activity.
2. Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
3. Please refer to the Statement of Disciplinary Action for the relevant provisions of the Code of Conduct.
4. Mung was suspended for nine months by the SFC.  Please see the SFC’s press release dated 21 September 2020.

Source: SFC