Hong Kong SFC Bans Citigroup Head & Board Member for 10 Years for Regulatory Breaches & Internal Control Failures for Revenue, Misrepresentations to I
Hong Kong, Asia's leading financial centre Caproasia.com | The leading source of data, research, information & resource for financial professionals, investment managers, professional investors, family offices & advisors to institutions, billionaires, UHNWs & HNWs. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets? Caproasia - Learn more Caproasia Access | Events | Summits | Register Events | The Financial Centre The 2023 Investment Day | 2023 Family Office Summits | Family Office Circle This site is for accredited investors, professional investors, investment managers and financial professionals only. You should have assets around $3 million to $300 million or managing $20 million to $3 billion. 
Hong Kong SFC Bans Citigroup Head & Board Member for 10 Years for Regulatory Breaches & Internal Control Failures for Revenue, Misrepresentations to Institutional Clients for Trades Execution Over 10 Years & Intentionally Mislabelled Trading Intent to Provoke Client Enquiries 8th March 2023 | Hong Kong
Hong Kong Securities & Futures Commission (SFC) has banned former Citigroup Head of Pan-Asia Execution Services Global Markets (Philip John Shaw, Board member & Responsible officer) for 10 years for serious regulatory breaches & internal control failures for revenue, making misrepresentations to institutional clients for trades execution over 10 years (2008 to 2018) and intentionally mislabelled trading intent to provoke client enquiries. Christopher Wilson, Hong Kong SFC Executive Director of Enforcement: “A key concern of the SFC is that Shaw had, through his misconduct, engendered a culture of chasing revenue at the expense of client interests and basic standards of honesty within CGMAL. In the circumstances, his conduct fell far short of the standards expected of a member of senior management of a licensed intermediary and the sanction against him is warranted. The disciplinary action against Shaw also underscored the SFC’s determination to hold errant senior management accountable for their firms’ failures. This is imperative for driving changes in the culture and behaviour of intermediaries” See below for Hong Kong SFC statement.
“ Hong Kong SFC Bans Citigroup Head & Board Member for 10 Years for Regulatory Breaches & Internal Control Failures for Revenue, Misrepresentations to Institutional Clients for Trades Execution over 10 Years & Intentionally Mislabelled Trading Intent to Provoke Client Enquiries “
- Article continues below - Web links may be disabled on mobile for security. Please click on desktop. Quick Links, Ads & Announcements Caproasia Access | Events | Summits | Register Events | The Financial Centre The 2023 Investment Day | 2023 Family Office Summits | Family Office Circle New to Caproasia Learn More | Sign Up | Subscribe | Register Events The 2023 Investment Day | HK & SG Where do you invest $250k, $1 million, $10 million, $100 million or $1 billion? Can you generate IRR of 10% / 15% / 20% or more? Private Equity, Hedge Funds, Boutique Funds, Private Markets & more. Taking place on 28th March 2023 in Hong Kong, 4th April 2023 in Singapore, and Virtual Investment Day in April 2023. Visit | Register here
Hong Kong SFC Bans Citigroup Head & Board Member for 10 Years for Regulatory Breaches & Internal Control Failures for Revenue
Hong Kong, Asia’s leading financial centre SFC bans Citigroup Global Markets Asia Limited’s former responsible officer Philip John Shaw for 10 years
6th March 2023 – The Securities and Futures Commission (SFC) has banned Mr Philip John Shaw, a former responsible officer (RO), board member and Head of Pan-Asia Execution Services of Citigroup Global Markets Asia Limited (CGMAL), from re-entering the industry for 10 years from 4 March 2023 to 3 March 2033 (Note 1).
The disciplinary action follows the SFC’s earlier sanctions against CGMAL for serious regulatory breaches and internal control failures in allowing various trading desks under its Cash Equities business to disseminate mislabelled Indications of Interest (IOIs) and make misrepresentations to institutional clients when executing facilitation trades from 2008 to 2018 (Notes 2 to 4).
The SFC is of the view that CGMAL’s breaches and failings were attributable to Shaw’s failure to discharge his duties as an RO and a member of CGMAL’s senior management.
Mr Christopher Wilson, the SFC’s Executive Director of Enforcement, said: “A key concern of the SFC is that Shaw had, through his misconduct, engendered a culture of chasing revenue at the expense of client interests and basic standards of honesty within CGMAL. In the circumstances, his conduct fell far short of the standards expected of a member of senior management of a licensed intermediary and the sanction against him is warranted.”
“The disciplinary action against Shaw also underscored the SFC’s determination to hold errant senior management accountable for their firms’ failures. This is imperative for driving changes in the culture and behaviour of intermediaries,” Mr Wilson added.
Specifically, the SFC found that:
- in 2015, Shaw introduced a mechanism to facilitate bulk generation of mislabelled IOIs by CGMAL’s Equities Sales Trading Desk involving some of the most actively traded blue-chip stocks in the market. Such IOIs were not backed by any potential order or interest from specific clients, but they were tagged as “Natural”, “In Touch With” and/or “P:1” with a view to provoking client enquiries. Shaw’s description of such IOIs as “the fakes” and “fake flow” indicated that he did not believe they were correctly labelled (Note 5);
- although the quality and accuracy of the IOIs had drawn client complaints, Shaw did not stop the dissemination of mislabelled IOIs and represented to the clients that they were classified in accordance with industry standards (Note 6); and
- on one occasion, after a trader had told a client that CGMAL advertised facilitation flow using “Natural” IOIs, Shaw instructed the trader to refrain from being honest with clients about the source of liquidity behind such IOIs and made misrepresentations to the client to perpetuate the falsehood created by the mislabelled IOI.
Furthermore, since at least 2015, Shaw had personally committed, and allowed his subordinates to commit, the following misconduct when executing facilitation trades (Note 7):
- gave factually incorrect information to the client or took positive steps to conceal the principal nature of the trade;
- made misleading statements that could be interpreted by the client as indicating that the trade would be executed on an agency basis, or sometimes remained silent notwithstanding some indication of the client’s belief that the trade was an agency trade; and/or
- remained silent or were not explicit with the client about the involvement of the Facilitation Desk and failed to obtain client’s consent before routing the client’s order to the Facilitation Desk for execution.
These findings demonstrate that Shaw had failed to ensure the maintenance of appropriate standards of conduct and adherence to proper procedures by CGMAL, including ensuring that adequate policies and systems controls were in place to effectively monitor the issuance of IOIs and facilitation activities, and that proper training had been provided to traders.
In deciding the disciplinary sanction, the SFC has taken into account all relevant circumstances, including:
- Shaw’s misconduct was intentional, dishonest and contrary to a licensed person’s overarching duty to act in clients’ best interests;
- CGMAL’s serious internal control failures and regulatory breaches could not have prevailed for over 10 years had he properly discharged his management and supervisory responsibilities;
- notwithstanding his experience and seniority, he denied any wrongdoing and attempted to shift all the blame to other management personnel and the compliance function of CGMAL, which reflected a lack of understanding of his duties as an RO and a member of the senior management as well as a lack of remorse;
- it is necessary to send a clear and strong message to the industry that the SFC will not tolerate misconduct such as his; and
- his otherwise clean disciplinary record.
Notes:
You are:
InvestorProfessionalFamily OfficeExecutive
Select:
TrialSubscriptionMembershipEvents
Interests / Events / Summits / Roundtables / Networking:
Professional InvestorPrivate WealthFamily OfficePrivate BankingWealth ManagementInvestmentsAlternativesPrivate MarketsCapital MarketsESG & SICEO & EntrepreneursTax, Legal & RisksHNW & UHNWs Insights
Your Name*
Company*
Job Title*
Email 1 (Work / Personal)*
Email 2 (Work / Personal)
Country
New to Caproasia Learn More | Sign Up | Subscribe | Register Events Caproasia Users - Manage $20 million to $3 billion of assets
- Invest $3 million to $300 million
- Advise institutions, billionaires, UHNWs & HNWs
- Caproasia.com
- Caproasia Access
- Caproasia Events
- The Financial Centre | Find Services
- Membership
- Family Office Circle
- Professional Investor Circle
- Investor Relations Network
- Professional Investor
- Family Office
- HNW Partnership
- Family Office Circle
- Family Office Networking
- Family Office Roundtable
- The Family Office Summit
- 28th March 2023 - Hong Kong
- 4th April 2023 - Singapore
- April 2023 - Virtual
- Sept 2023 - Hong Kong
- Oct 2023 - Singapore
- Oct 2023 - Hong Kong
- Visit: The Investment Day | Register: Click here
- The Investment Summit
- The Private Wealth Summit
- The Family Office Summit
- The CEO & Entrepreneur Summit
- The Capital Markets Summit
- The ESG / Sustainable Investment Summit
Owl Media Group takes pride in providing social-first platforms which equally benefit and facilitate engagement between businesses and consumers and creating much-needed balance to make conducting business, easier, safer, faster and better. The vision behind every platform in the Owl Media suite is to make lives better and foster a healthy environment in which parties can conduct business efficiently. Facilitating free and fair business relationships is crucial for any thriving economy and Owl Media bridges the gap and open doors for transparent and successful transacting. No advertising funds influence the functionality of our media platforms because we value authenticity and never compromise on quality no matter how lucrative the offers from advertisers may seem.