The Securities and Futures Commission (SFC) announced the reprimand and fine of Mega International Commercial Bank Co., Ltd. (MICBC) of 7 million for internal system and control failures in the sale of collective investment schemes (CISs).
SFC conducted an investigation in MICBC following information provided by the Hong Kong Monetary Authority (HKMA). SFC found that during the CISs to sale from August 2014 to July 2015, MICBC failed to implement adequate and effective systems and controls to assess its clients’ objectives, risk tolerance and expertise on derivatives.
The company also failed to ensure that that the investment advice provided to its clients was suitable to their circumstances. MICBC neglected to conduct product due diligence, identify funds which constituted derivative products and ensure relevant factors were taken into account before assigning risk ratings to funds.
In its decision, SFC took into account that MICBC took actions to fix its framework. The company also engaged an independent reviewer to validate whether the findings raised by the HKMA were fully addressed. MICBC cooperated with the Commission and SFC found that its clients suffered no losses from the company’s omissions.
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