The disciplinary action stems from events in 2011, when Lai was a representative of UOB Kay Hian in Hong Kong and UOB Kay Hian Futures in Hong Kong. A client account, opened by Lai’s sister, suffered substantial losses from Nikkei 225 Index Futures trading after a tsunami struck in Japan on 11 March that year.
Lai traded more than 400 Nikkei futures after the tsunami hit.
The account eventually built a long position of 840 contracts, with some buy contracts traded without the knowledge of UOB, SFC said in a disciplinary action statement.
Without margin protection, the long position “was unwound on 15 March 2011 and resulted in a trading loss of nearly $50 million”, the regulator noted.
The case showed that Lai “misled his employer about the risk exposure of the client’s account,” and “acted against the best interests of the client”.
Nevertheless, he “falsely declared that he was not related to a holder of a client account”, and “carried out discretionary trading in secret and without proper authorisation”, the regulator said.
Lai left the firm shortly after the incident in March 2011.
A complaint was filed with the SFC until October 2013.
“Lai’s conduct casts doubts on his fitness and properness to be a licensed person,” the SFC concluded.
