Hong Kong’s Markets Regulator Fines Morgan Stanley $2.4 Millionby and
SFC says failures are related to execution of client orders
Morgan Stanley failed to avoid conflicts of interest: SFC
Hong Kong’s securities regulator fined a Morgan Stanley unit HK$18.5 million ($2.4 million) over internal control failures.
The Securities and Futures Commission said in a statement Wednesday that Morgan Stanley Hong Kong Securities Ltd. failed to avoid conflicts of interest, comprehensively document elements of its electronic trading systems, or meet disclosure requirements related to short-selling orders. The control failures, which covered a period between 2013 and 2016, also related to position limits, said the regulator, which reprimanded as well as fined the U.S. bank.
The Morgan Stanley unit co-operated in resolving regulatory concerns, SFC said in the statement. The unit also “agreed to engage an independent reviewer to conduct a forward-looking review of its internal controls to ensure compliance with the relevant regulatory requirements,” SFC said.
Nick Footitt, a Hong Kong-based spokesman for Morgan Stanley, declined to comment.
Hong Kong’s brokerages and analysts have recently been under SFC scrutiny on the issue of internal controls. In Dec. 2015, JPMorgan Chase & Co. units were fined HK$30 million for regulatory breaches by the firm’s institutional equities business between 2010 and 2013, including breaking a ban on so-called naked short-selling.
The commission in August 2015 fined BNP Paribas SA’s local unit HK$15 million for breaching rules for operating dark pools. The French bank later shut the trading venue.
In stepping up its oversight over the city’s securities industry, the SFC appointed Thomas Atkinson to head its enforcement division for three years starting May 3. Atkinson was most recently the director of enforcement at Canada’s Ontario Securities Commission.