Hong Kong Regulator Fines JP Morgan Entities For Rule Breaches

Tom Burroughes

17 December 2015

A Hong Kong regulator has scolded a number of entities and fined them a total of HK$30 million ($3.87 million) for various rule breaches and internal control failings.

The Securities and Futures Commission has reprimanded JP Morgan Broking (Hong Kong), JP Morgan Securities (Asia Pacific) and JP Morgan Securities (Far East), and fined them $15 million, $12 million and $3 million respectively for various regulatory breaches and/or internal control failings.

An SFC investigation revealed that JP Morgan had failed to implement adequate systems and controls in its institutional equities business in Hong Kong to ensure compliance with the rules and regulations applicable to short selling activities; client facilitation and principal trading business; and operation of dark liquidity pool trading services, the regulator said in a statement yesterday.

“Many of the above failings were not identified or corrected until the SFC brought them to JP Morgan’s attention in the course of a SFC inspection into the business activities of JPMBHK and JPMSFE,” the SFC said. It added, however, that in setting its punishment, it noted that the US bank co-operated in resolving concerns, has taken steps to rectify the problems and agreed to use an independent reviewer to examine its internal controls.