Hong Kong SFC Fines Asia Research & Capital Mgmt $223,000 for Failure to Comply with EU Short-Selling Reporting Requirements on London Exchange Premie
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Hong Kong SFC Fines Asia Research & Capital Mgmt $223,000 for Failure to Comply with EU Short-Selling Reporting Requirements on London Exchange Premier Oil, Head of Compliance & Operations Billy Wong Banned for 2 Months 13th October 2022 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has fined Asia Research & Capital Mgmt $223,000 (HKD 1.75 million) for failure to comply with European Union short-selling reporting requirements on London Exchange (LSE) listed company Premier Oil PLC and notify Hong Kong authorities of regulatory breaches, with Head of Compliance & Operations Billy Wong Yim Chi banned for 2 months (Oct – Dec 2022. Hong Kong SFC: “Asia Research & Capital Mgmt (ARCM) failures to comply with the EU Regulation were directly attributable to Wong’s failure to discharge his duties as ARCM’s Manager-in-charge for Compliance and a member of its senior management during the material time. On 14th October 2020, the UK Financial Conduct Authority (FCA) published a final notice of its enforcement action against ARCM for ARCM’s failures to disclose its net short position in London Stock Exchange-listed Premier Oil plc (Premier Oil) to the FCA and the public between 22 February 2017 to 3 December 2019. The FCA found that ARCM failed to make a total of 155 notifications to the FCA and 153 public disclosures of its net short position in Premier Oil in breach of the EU Regulation (Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps). The FCA imposed a financial penalty of £873,118 on ARCM for its breaches of the EU Regulation. See below for more information and HK SFC statement.
“ Hong Kong SFC Fines Asia Research & Capital Mgmt $223,000 for Failure to Comply with EU Short-Selling Reporting Requirements on London Exchange Premier Oil, Head of Compliance & Operations Billy Wong Banned for 2 Months “
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The Securities and Futures Commission (SFC) has reprimanded and fined Asia Research & Capital Management Limited (ARCM) $1.75 million for failures relating to its non-compliance with the European Union’s short selling reporting requirements (EU Regulation) and to promptly notify the SFC of its material regulatory breaches (Note 1).
The SFC has also banned Mr Billy Wong Yim Chi, ARCM’s former Head of Compliance and Operations and Manager-In-Charge (MIC) for Compliance for two months from 10 October 2022 to 9 December 2022 (Note 2). This is because ARCM’s failures to comply with the EU Regulation were directly attributable to Wong’s failure to discharge his duties as ARCM’s MIC for Compliance and a member of its senior management during the material time.
On 14 October 2020, the UK’s Financial Conduct Authority (FCA) published a final notice of its enforcement action against ARCM for ARCM’s failures to disclose its net short position in London Stock Exchange-listed Premier Oil plc (Premier Oil) to the FCA and the public between 22 February 2017 to 3 December 2019 (Note 3).
The SFC’s investigation, conducted after the conclusion of the FCA’s enforcement action, found that ARCM failed to:
- implement adequate systems and controls in its compliance framework to monitor and ensure its short position in Premier Oil was properly reported to the FCA and disclosed to the public as required under the EU Regulation (Note 4);
- seek legal advice on its reporting obligations under the EU Regulation before it established a short position in Premier Oil even though ARCM was investing in a new jurisdiction and unfamiliar with the EU market (Note 4); and
- notify the SFC immediately upon becoming aware that it had materially breached the EU Regulation, and only did so after a delay of around two months (Note 5).
The SFC also considers Wong’s conduct fell short of the standard required of him as the MIC for Compliance and a member of ARCM’s senior management at the material time (Note 6).
In deciding the disciplinary sanctions, the SFC took into account all relevant circumstances, including:
- the remedial actions taken by ARCM to enhance its systems and controls on regulatory disclosure;
- the cooperation of ARCM and Wong in resolving the SFC’s concerns; and
- ARCM and Wong have otherwise clean disciplinary records.
Notes:
Read More: A copy of the Statement of Disciplinary Action is available on the SFC website
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