Suspended broker placed suspicious orders, operated secret account

Hong Kong’s securities regulator has suspended the executive of a brokerage for two years for executing suspicious client orders and operating a secret securities account.

Ko Cho Ting, formerly of Emperor Securities, cannot re-enter the financial services industry from August 2, 2016 to August 1, 2018.

The Securities and Futures Commission (SFC) found that he had placed suspicious bid orders for the shares of Timeless Software for one of his clients.

From May 1 to June 28, 2012, the client placed a small order for Timeless shares during the last two minutes of the continuous trading session (CTS) on 18 trading days. Seventeen of these late orders were the last order of the day that set a higher closing price for Timeless shares.

The CTS comprises the morning session between 09:30am and 12:00 noon and the afternoon session between 01:00pm and 04:00pm.

Although Ko suspected that the late orders might inflate the closing price of Timeless shares and be considered to be manipulative, he acted in accordance with the client’s instructions and made no proper inquiries or took no steps to alert his firm’s management.

Ko also breached his company’s employee dealing policy by failing to disclose a personal securities trading account and securities transactions conducted therein.

By knowingly placing suspicious orders to the market for his client, Ko did not act in the best interest of market integrity, and his conduct fell short of the standard expected of him.

Ko was licensed for type 1 (dealing in securities) and type 2 (dealing in futures contracts) regulated activities and had been accredited to Emperor Securities since October 6, 1994.