Tuesday March 13 2018

News Source: Global Disclosures

Focus: Shareholder Disclosure Sanctions

Type: General

Country: Hong Kong




On 13th March 2018, the Securities and Futures Commission (SFC) resolved its concerns with Deutsche Bank AKTIENGESELLSCHAFT (DBAG) and its wholly-owned subsidiary Deutsche Securities Asia Limited (DSAL) over regulatory breaches related to short position reporting, unlicensed regulated activities and segregation of client monies.

The Securities and Futures Commission (SFC) has resolved its concerns with Deutsche Bank AKTIENGESELLSCHAFT (DBAG) and its wholly-owned subsidiary Deutsche Securities Asia Limited (DSAL) over regulatory breaches related to short position reporting, unlicensed regulated activities and segregation of client monies (Notes 1 & 2).

Under the resolution, the SFC publicly reprimanded and fined them a total of $8.3 million for the following regulatory breaches:

  • DBAG failed to comply with the short position reporting requirements, which resulted in a failure to report 792 reportable short positions between June 2012 and January 2015, and published 49 research reports between January 2015 and March 2017 on futures contracts without a Type 5 regulated activity registration; and
  • DSAL failed to segregate client monies within the timeline prescribed by the Securities and Futures (Client Money) Rules in 117 incidents between January 2010 and December 2014 and such failures were rectified after the prescribed timeline.

In reaching this resolution, the SFC took into account:

  • their self-reports to the SFC of the regulatory breaches and failures;
  • their cooperation with the SFC in resolving the SFC’s concerns;
  • remedial measures they adopted to strengthen their internal controls and systems to avoid the recurrence of similar issues; and
  • their undertaking to provide the SFC with a report prepared by their internal audit team after 12 months confirming that (i) DBAG has controls in place to ensure the accurate reporting of short positions and (ii) DSAL’s controls are effective in ensuring that client monies are properly segregated.

The SFC considers that the cooperation of DBAG and DSAL has expedited the disciplinary proceedings; otherwise, similar failures would have resulted in a substantially higher level of fine.

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