The misconduct took place between December 2015 and January 2016, when Cheung was registered at Hang Seng Bank to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 7 (providing automated trading services) regulated activities.
“The unauthorised transactions involved the switching of an investment fund in the customer’s investment account and two unauthorised fund transfers from the customer’s personal consolidated bank account to her credit card account,” the SFC said.
In the first incident, an investment fund subscription and switching application form showed the customer purportedly gave instructions to Hang Seng to switch about 37 thousand units from a JP Morgan Asia Fund to a JP Morgan Global Bond Fund.
The customer told Hang Seng that she did not authorise the switch.
According to the regulator, Cheung claimed he had discussed recent market volatility with the customer and advised her to switch her funds to lower risk products, and the customer agreed the reduction of risks and a balanced portfolio was a priority.
She told Cheung she would get back to him on a decision, but she didn’t contact him later that day.
“Cheung admitted he proceeded to complete the fund switching form and forged the customer’s signature on the form to switch the funds from the JP Asia Fund to the JP Global Fund.
“When the customer discovered the unauthorised fund switch a few days later, Cheung lied and told the customer that, following a systems upgrade at [Hang Seng], he had the authority to switch funds for customers.”
The second and third unauthorised transactions involved two account withdrawal forms the customer purportedly signed to transfer two separate sums, about HK$153,000 ($19,600) and HK$2190 ($280), from the consolidated account to the credit card account.
“Cheung claimed that the customer sought his assistance in settling the outstanding balance in the credit card account, and he therefore conducted the fund transfers to settle the outstanding balance.
“Cheung admitted he did not inform the customer about the method that he would use to settle the outstanding balance in the credit card account, but claimed he informed the customer once the fund transfers were completed.”
The SFC noted that in deciding the sanction, it took into account all relevant circumstances, including the bank’s HK$31,455 financial loss resulting from his misconduct and his otherwise clean disciplinary record.
The regulator concluded that it “considers Cheung’s conduct dishonest and calls into question his fitness and properness to be a registered or licensed person”.
The ban period starts from 12 September 2019 to 11 September 2021. Cheung is currently not registered with the Hong Kong Monetary Authority nor licensed by the SFC.
Hang Seng Bank reversed Cheung’s unauthorised fund switch in the investment account at a loss of HK$31,455. The loss was borne by Hang Seng.