Deutsche Securities Asia fined HK$2.45m for lapses

Business | 24 Jun 2021 7:15 pm

The Securities and Futures Commission fined Deutsche Securities Asia HK$2.45 million for issuing incorrect statements to prime brokerage clients and delaying reporting its failures to the regulator.

The SFC said that between 2006 and October 2018, due to a design defect of its front office system, Deutsche Securities issued incorrect periodic statements to its prime brokerage clients when they were holding positions regarding their entitlements to bonus shares of listed companies that had not yet become tradable by the clients.

The incorrect statements displayed these bonus shares as settled and tradable as of the ex-entitlement dates when in fact they had not become unconditional for long sale until the settlement dates.

It appears that one of Deutsche Securities’ clients relied on the incorrect statements and oversold bonus shares issued by three Hong Kong-listed companies in July 2018. Although Deutsche Securities found the same month that incorrect statements had been issued and became aware the following month that the errors were caused by a system design defect. It did not report the failures to the SFC until February 2019 when its internal investigation was complete, the SFC said.

 



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