Hong Kong SFC Reprimands And Fines Nomura International (Hong Kong) Limited

The Securities and Futures Commission (SFC) has reprimanded and fined Nomura International (Hong Kong) Limited (Nomura Hong Kong) HK$4.5 million for failing to report significant misconduct by a former trader in a timely manner.

On 11 June 2013, Nomura Hong Kong informed the SFC that Mr X, a trader on secondment from Nomura Securities Co., Ltd in Japan (Nomura Japan), had incurred a US$3.3 million trading loss on 23 May 2013 and that he had been sent back to Japan on 5 June 2013 (11 June Report).

However, the SFC subsequently found out that at the time of the 11 June Report, Nomura Hong Kong already knew Mr X had admitted to making false entries in Nomura Hong Kong’s risk management system to conceal the real risk exposure of his trades and to providing false information to Nomura Hong Kong. Yet, none of these matters were disclosed to the SFC immediately when they should have been under the Code of Conduct.

The SFC also found out that by the time Mr X left Hong Kong following the termination of his secondment with Nomura Hong Kong, Nomura Hong Kong had already noticed some apparent discrepancies between his actual trading activities and the information he had provided to management. Mr X was sent back to Nomura Japan before the SFC had been properly alerted and before Nomura Hong Kong had completed its internal investigation into his conduct.

The SFC further found that by 19 June 2013, Nomura Hong Kong had already prepared a draft preliminary report of its investigation on Mr X’s trading activities, but it did not provide the report or its subsequent drafts to the SFC until the SFC made further enquiries.

It was not until 17 July 2013, after the SFC followed up on Nomura Hong Kong’s 11 June Report, that Nomura Hong Kong informed the SFC for the first time that Mr X had engaged in inappropriate conduct. The SFC was eventually provided with the preliminary report two days later.

Mr Mark Steward, the SFC’s Executive Director of Enforcement, said: “Nomura left out highly relevant information from its first report to the SFC and then had to be chased to report properly. There can be no excuses for such delays in reporting matters requiring our immediate attention. Delays, like these, contribute to misconduct and prejudice investigations. Intermediaries must report problems to us immediately - not after internal investigation, not after legal advice has been obtained but straightaway, without leaving out any important information.”

 

WEB'S BEST

Top stories from across the globe

  • Asia Pacific's Top Six Credit Risks For 2017
  • The 5 Most Shocking News in 2016
  • Hazel Moore: Banks Are Completely Wasting Valuable Customer Data
  • Morgan Stanley CEO Makes First-Ever Stock Sales After Bank Rally
  • Former Goldman's Partner in Boutique Venture
  • Hong Kong and Singapore in Push for Fee Transparency
More

PHOTO GALLERIES

finews.asia Networking Event

finews.asia Networking Event

Show pictures

stars China Symposium 2016

stars China Symposium 2016

Show pictures

Compare my salary

Compare my salary

Feeling Underpaid? Benchmark your salary by job title, company and location. Find out where you stand in minutes.

compare my salary

Newsletter

Newsletter-SymbolFree Subscription

Subscribe to our free newsletter and receive daily email alerts from the finews editorial team with a list of the top featured articles.

Share with us

Do you have any market intelligence to share with finews.asia – email us on info@finews.asia – All communication is completely confidential and strictly anonymous.