September 12, 2023

Hong Kong SFC Sanctions Responsible Officer and Manager-In-Charge over Financial Resources Rules Breaches

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Other Author      Sara Troughton, Professional Support Lawyer (Litigation)

The Securities and Futures Commission (SFC) has revoked the asset management licence of Axial Capital Management Limited (Axial) for repeated failures to comply with the Securities and Futures (Financial Resources) Rules (FRR), the Securities and Futures Ordinance (SFO) and the Code of Conduct for Persons Licensed by or Registered with the SFC (the “Code”). The SFC has also suspended the licence of Axial’s responsible officer and manager-in-charge for five years. Please see the SFC’s statement dated 11 September 2023 here.

The SFC concluded that Axial fell far short of the standards required of a licensed intermediary by “flouting the FRR regime” which “threatens the integrity of the market”. The SFC found that in breach of the FRR, SFO and the Code, Axial:

  • failed to maintain the required liquid capital for a consecutive period of 19 months and failed to notify the SFC on time; and
  • repeatedly failed to submit its FRR returns and annual documents within the prescribed time.

The SFC also found that Axial’s breaches were attributable to the failures of its responsible officer (also the manager-in-charge for all core functions) who bears primary responsibility for ensuring the maintenance of appropriate standards of conduct and the adherence to proper procedures by Axial.

This is a reminder to all responsible officers and managers-in-charge that the SFC will continue to sanction licensed corporations that commit serious regulatory breaches as well as members of senior management who are accountable for the misconduct.

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