Hong Kong SFC Bans Director of Wansom Asset Management & Wansom Securities for Life for Providing False & Misleading Information for Licence Applications, Withdrew Capital Ranging from $201,000 to $382,000 for Own Use & Triggering Fall-Below Capital Level
7th June 2023 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has banned the Director of Wansom Asset Management & Wansom Securities (Xie Yangxiong) for life for providing false & misleading information for licence applications, withdrawing capital ranging from $201,000 to $382,000 (HKD 1.58 million to HKD 3 million) for own use which triggers the fall-below capital level. Hong Kong SFC: “The SFC found that Xie deposited funds into the bank accounts of WAML and WSL he solely controlled to meet their liquid capital requirements. He also provided this information to an external consultant he had engaged to handle their licence applications, knowing the information would be provided to the SFC in support of their licence applications. Shortly afterwards, Xie withdrew the same funds from the bank accounts. In the circumstances, had the withdrawn funds been excluded from the liquid capital calculation, both Wansom Asset Management & Wansom Securities would have been denied licences to carry on regulated activities due to their inability to fulfil the liquid capital requirements applicable to them at the time of their licence applications. After obtaining the licences, Xie’s withdrawal of funds from the bank accounts of WAML and WSL for his own use resulted in their liquid capital deficits varying from $1.58 million to $3 million from July to October 2018. Xie also failed to ensure that Wansom Asset Management & Wansom Securities notified the SFC of their liquid capital deficits within one business day of their liquid capital falling below the required level.” See below for more info.
“ Hong Kong SFC Bans Director of Wansom Asset Management & Wansom Securities for Life for Providing False & Misleading Information for Licence Applications, Withdrew Capital Ranging from $201,000 to $382,000 for Own Use & Triggering Fall-Below Capital Level “
Hong Kong SFC Bans Director of Wansom Asset Management & Wansom Securities for Life for Providing False & Misleading Information for Licence Applications
SFC bans Xie Yangxiong for life
6th June 2023 – The Securities and Futures Commission (SFC) has banned Mr Xie Yangxiong, a director of Wansom Asset Management (Hong Kong) Limited (WAML) and Wansom Securities (Hong Kong) Limited (WSL), from the industry for life (Notes 1 & 2).
The disciplinary action follows an SFC investigation which found that Xie, who was the only person with control of and access to the bank accounts of WAML and WSL at the material time, was directly responsible for the provision of false and misleading financial information by both firms to the SFC in support of their licence applications in July and August 2018 and their failures to maintain sufficient liquid capital and notify the SFC of their insufficient liquid capital following the grant of their licences (Notes 3 & 4).
Specifically, the SFC found that Xie deposited funds into the bank accounts of WAML and WSL he solely controlled to meet their liquid capital requirements. He also provided this information to an external consultant he had engaged to handle their licence applications, knowing the information would be provided to the SFC in support of their licence applications. Shortly afterwards, Xie withdrew the same funds from the bank accounts.
In the circumstances, had the withdrawn funds been excluded from the liquid capital calculation, both WAML and WSL would have been denied licences to carry on regulated activities due to their inability to fulfil the liquid capital requirements applicable to them at the time of their licence applications (Note 5).
After obtaining the licences, Xie’s withdrawal of funds from the bank accounts of WAML and WSL for his own use resulted in their liquid capital deficits varying from $1.58 million to $3 million from July to October 2018. Xie also failed to ensure that WAML and WSL notified the SFC of their liquid capital deficits within one business day of their liquid capital falling below the required level.
The SFC is of the view that the misconduct of WAML and WSL was the direct result of Xie’s consent or connivance and should be regarded as misconduct on his part. As such, his conduct casts serious doubt on his fitness and properness to be a regulated person (Note 6).
In deciding the sanction, the SFC took into account all relevant circumstances, including:
- Xie’s honesty and integrity had been impugned;
- a strong deterrent message to the industry on zero tolerance of attempt to mislead the SFC;
- WAML and WSL had not conducted any regulated activities before their licences were suspended and no clients were prejudiced by their regulatory failures; and
- Xie’s otherwise clean disciplinary record.
Notes:
- Xie was also the sole owner of the entity which wholly owned WAML and WSL. Although Xie was not a licensed person under the Securities and Futures Ordinance (SFO), he came within the definition of a “regulated person” under section 194(7)(c) of the SFO which includes a person who is or at the relevant time was involved in the management of the business of a licensed corporation.
- WAML was granted a licence by the SFC to carry on Type 4 (advising on securities) and Type 9 (asset management) regulated activities on 25 July 2018. WSL was granted a licence by the SFC to carry on Type 1 (dealing in securities) regulated activity on 23 August 2018. Their licences were suspended by the SFC on 30 October 2018 and revoked on 28 September 2020.
- Rules 4 and 6 of the Securities and Futures (Financial Resources) Rules (FRR) require a licensed corporation to maintain at all times a minimum amount of required liquid capital. WAML and WSL were each required to maintain a minimum liquid capital of $3 million.
- Section 146(1) of the SFO requires a licensed corporation to notify the SFC as soon as reasonably practicable when it becomes aware of its inability to maintain financial resources specified by the FRR. Rule 55(1) of the FRR also requires a licensed corporation to notify the SFC as soon as reasonably practicable and in any event within one business day of becoming aware of its liquid capital falling below 120% of the required level.
- Section 116(3)(b) of the SFO provides that the SFC shall refuse to grant a licence to carry on a regulated activity unless the applicant satisfies the SFC that it will be able to comply with the FRR.
- Section 193(2)(a) of the SFO provides that where an intermediary is, or was at any time, guilty of misconduct as a result of the commission of any conduct occurring with the consent or connivance of, or attributable to any neglect on the part of a person involved in the management of the business of the licensed corporation, the conduct shall also be regarded as misconduct on the part of that other person.
A copy of the Statement of Disciplinary Action is available on the SFC website
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