EFG Bank AG fined $2 million
The Securities and Futures Commission (SFC) has reprimanded and fined EFG Bank AG (EFG Bank) $2 million for dealing in futures contracts without the required registration (Note 1).
The SFC found that between 1 April 2003 and 22 November 2016, EFG Bank executed 139 transactions in offshore listed index options for 11 clients without the required registration to deal in futures contracts (Notes 2 & 3).
The SFC is of the opinion that EFG Bank’s failure to ensure compliance with a registration requirement under the Securities and Futures Ordinance, amounting to a breach of the Code of Conduct, called into question the fitness and properness of EFG Bank as a regulated person (Notes 4 & 5) .
In deciding the disciplinary sanctions, the SFC took into account that:
- EFG Bank initiated a review of its offshore listed index options activities and self-reported the unlicensed activities to the SFC;
- there is no evidence to suggest that the non-compliance was intentional;
- EFG Bank co-operated with the SFC in resolving the SFC’s concerns;
- EFG Bank has taken remedial measures to strengthen its internal controls to avoid recurrence of similar issues; and
- EFG Bank has an otherwise clean disciplinary record with the SFC.
- EFG Bank is a registered institution under the Securities and Futures Ordinance (SFO) to carry on business in Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.
- Under section 114 of the SFO, no person shall carry on a business in a regulated activity or hold himself out as carry on a business in a regulated activity without a licence or registration for the regulated activity.
- The offshore listed index option fell within the definition of “futures contracts” under the SFO.
- Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct).
- General Principle 7 (Compliance) and paragraph 12.1 (Compliance: in general) of the Code of Conduct require a licensed or registered person to comply with, and implement and maintain measures appropriate to ensuring compliance with, all regulatory requirements applicable to the conduct of its business activities.