HKG tribunal upholds fund house penalty

Added 3rd July 2015

Hong Kong’s Securities & Futures Appeals Tribunal (SFAT) has backed a decision to fine and reprimand Pride Fund Management for refusing to resolve a financial dispute with a client.

HKG tribunal upholds fund house penalty

The tribunal upheld the decision by the Securities and Futures Commission (SFC) to fine the fund house after it failed to abide by rules under the Financial Dispute Resolution Scheme (FDRS). However, the tribunal reduced the fine from $700,000 to $400,000.

According to the SFC, this is the first time it has enforced the code of conduct to ensure a company complies by the FDRS rules.

Pride had rejected requests by the scheme’s staff to reconcile a disagreement with an eligible claimant. A notice of non-compliance was therefore issued in June 2013.

Deliberate non-compliance

The firm claimed it had not understood what was required to comply with the FDRS, but the tribunal disagreed and said its failure to comply was deliberate.

“Although the obligations under the FDRS may not be generally understood, after the public reprimand there can be no further excuse,” said the SFC.

"Sterner penalties can be expected in the future”

“The SFC takes non-compliance with the FDRS seriously and will continue to take action against SFC-licensed intermediaries who fail to comply with the scheme.”

The chairman of the tribunal also warned that “sterner penalties can be expected in the future”.

The FDRS is an independent resolution scheme which was set up in November 2011 to ensure banks and brokers resolve monetary disputes with their customers through mediation or, failing this, arbitration.

Pride Fund Management is licensed by the SFC to deal in securities, to advise on securities, and for asset management activities.

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