Hong Kong's Securities and Futures Commission (SFC) reprimanded Ruifeng Securities Limited (RSL) and fined it HK $5.2 million for errors in its fund management activities and account opening procedures。

The disciplinary action was taken by the SFC following an investigation into Ruifeng Securities' role as an investment manager of a Cayman registered fund between July 1, 2019 and December 10, 2020.。The survey found that as of May 2020, RSL had invested 90 per cent of the fund's approximately $94.5 million net asset value in financial instruments linked to a mainland property developer, even though the company had identified various headwinds in its own analysis.。

In addition, the company has not fully disclosed material information about the fund.。

The SFC has also suspended the licence of Mr. Fang Zhi for a period of 10 months from 1 December 2023 to 30 September 2024 for failing to perform his duties as a responsible officer of the RSL for the fund management activities of the company.。

Specifically, RSL failed to develop adequate risk management measures to ensure that the Fund was not exposed to excessive risk and that its decision to invest in certain fixed income products was reasonable and in the best interests of the Fund after considering all relevant factors.。

The company also did not fully disclose information about the fund's investment holdings, which is necessary for fund investors to make informed judgments about the fund's investments.。

In addition, the Company failed to identify, prevent, manage and minimize conflicts of interest arising from its underwriting activities and failed to disclose such conflicts to the Fund's investors; and to ensure the accuracy of the statements made to the note issuer on behalf of the Fund in the subscription agreement。

The SFC's investigation also found that for customers who opened accounts on a non-face-to-face basis through the RSL mobile app between November 26, 2018 and July 31, 2020, RSL failed to verify their identity using acceptable account opening procedures.。

The regulator believes that RSL's lapses in fund management can be attributed to Fang's failure to perform his duties as a responsible person and member of RSL's senior management.。

In deciding on the sanctions, the SFC considered all relevant circumstances, including RSL's remedial action, RSL and Fang's cooperation with the SFC in addressing SFC concerns, and their clean disciplinary records in other areas.。