2019.20 Topic 4 Code of Conduct.pdf - Seminar 4 SFC Code of Conduct 30th September 2019 Agenda of the Day • SFC Code of Conduct • The case of Selina

2019.20 Topic 4 Code of Conduct.pdf - Seminar 4 SFC Code of...

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Seminar 4 SFC Code of Conduct 30 th September2019
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Agenda of the Day SFC Code of Conduct The case of Selina Kwok vs HSBCPB 9 General Principles and related regulations “Manager-in-charge” regime – GP 9 Responsibility of Senior Management The Disciplinary case of Joyce Hsu Merrill Lynch
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SFC Code of Conduct
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SFC Code of Conduct The Code sets the requirements that a licensed or registered person is deemed “fit and proper” to remain licensed or registered SFC will be guided by the Code of Conduct in such assessment, having regard to the general principles, as well as the letter, of the Code Failure to comply with the Code may reflect adversely on the person’s fitness and properness
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SFC Code of Conduct The affected person may be subject to disciplinary actions by the SFC Private or public reprimand Suspension/revocation of license Fine The Code does not have the force of law and should not be interpreted in a way that would override the provision of any law Selina Kwok vs HSBC PB Selina Kwok sued the bank for breaching the Code and the client resulted in substantial loss
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Selina Kwok v HSBC Background Ms Kwok had purchased some 350 forward accumulators (FAs) between 2003 and 2007 In December 2007, Ms Kwok’s total exposure in FAs was about USD90 million Ms Kwok brought proceedings against HSBC for the loss Total claim was USD10.4 million 6
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Selina Kwok v HSBC Terms in the Account Documentation “risk of loss in trading assets …. can be substantial” Customer should “carefully consider whether …trading or investment….directed by you …is suitable in light of your financial condition, your tolerance of risk and your investment experience” Bank “do not offer investment advice of any nature and whilst we may provide information or express opinion from time to time, such information or opinions are not offered as investment advice” 7
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Selina Kwok v HSBC Judge’s comment Ms Kwok may…be financially unsophisticated, but she is an adult, not a child. She had a secondary school education in England and studied Maths for two years at University College London Ms Kwok is perfectly capable of understanding the key terms of the Risk Disclosure Statement An elementary principle of contract law is that an adult is bound by one’s signature on an agreement (i.e. the Account Opening Booklet) – “Contractual Estoppel” 8
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Selina Kwok v HSBC Findings and Judgment Legal relationship between the Bank and Ms Kwok is described in the account documentation Account is an “execution-only”, the bank cannot be taken as having impliedly accept a core duty to manage Ms Kwok’s account Risk Disclosure Statement excluded investment advice and suitability assessment from the Bank’s obligations The Code of Conduct cannot override express contractual provision 9
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SFC Code of Conduct Failure to comply with the Code
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