Hong Kong's Securities and Futures Commission (SFC) rebukes Central Wealth Securities Investment Limited for failing to comply with the Securities and Futures (Financial Resources) Rules (FRR) and imposes a $1 million fine。

The SFC found that Central Wealth had various accounting and calculation errors in its financial returns filed under the Financial Resources Rules that led it to overstate its working capital between April 2019 and December 2020.。After removing the error, it was found that Central Wealth suffered a loss of between $1.62 million and $49.08 million in the required working capital for eight months of the relevant period, in violation of the Financial Regulations and Rules.。

Central Wealth's failure to ensure the accuracy of the financial statements was primarily due to its failure to appoint qualified and competent personnel to prepare and review the financial statements.。In particular, preparers of financial statements do not have sufficient knowledge and experience to perform their duties。

In addition, the personnel responsible for reviewing and signing the financial returns were not familiar with the FRR requirements and failed to identify errors in the financial returns submitted to the SFC.。

SFC finds Central Wealth's actions violated FRR and code of conduct。

In deciding the penalty, the SFC considered a variety of circumstances, including the duration and extent of Central Wealth's failure, as well as Central Wealth's work with the SFC to address SFC concerns, and Central Wealth's otherwise clean disciplinary record.。