SFC Fines SMC $1.5m for Short Selling
SFM HK Management Limited (SFM) has been fined £1.5m by the Hong Kong Securities and Futures Commission (SFC) over the short selling of Great Wall Motor Company Limited shares in 2015.
An SFC investigation found that on 28 August 2015, Great Wall had announced its proposed bonus issue of shares. On 30 September the fund’s custodian then notified SFM of its entitlement to 1,616,00 bonus shared. SFM booked the bonus shares into the SFM trading system on the same day, but failed to segregate them into a restricted account in line with their policy. Consequently, the system indicated that a total of 2,424,000 shares were available for trading, when in fact only 808,000 shares were available. One fund manager placed an order to sell all 2.424,000 shares on 2 October 2015 despite the unavailability.
The SFC concluded that SFM failed to act with due skill, care and diligence in dealing with the bonus shares, as well as failing to diligently supervise its staff, and implement adequate systems and controls to ensure compliant behaviours.