SFC Restricts Interactive Brokers HK on Accounts Linked to Insider Trading

March 9, 2018

The Securities and Futures Commission (SFC) of Hong Kong has sent a notice to Interactive Brokers Hong Kong (IBHK), restricting the company from conducting various processes with respect to certain assets held within the client account.

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The notice comes on the heels of an ongoing investigation, pertaining to suspected insider dealing in the shares of Bloomage BioTechnology Corporation. The allegations for insider trading, appear to have occurred between May 22 and June 15, 2017.

The restrictions applied on IBHK, prohibit the company from taking certain actions associated with the respective assets, without prior written consent from the SFC.

SFC Detailed Restrictions

As part of the notice that is discussed in the official announcement on the SFC website, the IBHK must receive the SFC’s consent to partake in the “disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with any assets in any way in the Client Account.”

The announcement provides further details into the restrictions on the accounts that are associated with the insider trading allegations. Interactive Broker Hong Kong is currently not permitted to enter into transactions of any securities within the aforementioned accounts.

The company must also refrain from processing any withdrawals or transfers of securities or cash that is induced from the selling of securities, without written consent from the SFC.

IBHK is also restricted in its ability to dispose of handle any securities, in response to instructions given by any authorized entity on the associated account. They also must beware of assisting any entity in dealing in securities within the restricted accounts, as instructed by the SFC.

In the event that IBHK receives instructions as mentioned above, the company must immediately notify the SFC of the incident for further assessment and actions that will be handled by the regulatory body.

Interactive Brokers Fined by SFC Earlier this Week

Earlier this week, Finance Magnates reported that the SFC had fined IBHK a total of $4.5 million for internal control issues that took place between 2015 and 2016. Moreover, the SFC also reprimanded IBHK for not having proper internal controls in place to assure proper market execution practice, as well as not appropriately documenting and disclosing its electronic trading systems.

SFC Retracts Alert on Multibank Exchange Group

While the SFC remains highly vigilant in regulatory matters in Hong Kong, earlier this week the regulator canceled a warning issued against Multibank Exchange Group, which was initially issued in February of this year.

Multibank Exchange Group followed the alert, by issuing a court filing to dispute the claims made by the SFC that the company was unlicensed. This led to the SFC retracting its previous alert and removing the company from its ‘alert list’ on its website.

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