The and Futures Commission (SFC) has fined HPI Forex Limited $255,000 for failing to adhere to client money segregation rules. The company has transferred funds from its segregated account to trading accounts at FXCM and Interactive Brokers between March 2013 and April 2014.
The client money mis-handling that occurred over a period of 13 months resulted in disciplinary action on . HPI has admitted to mishandling customer funds for up to $1 million. Apparently the brokerage transferred the money to overseas brokerage companies Interactive Brokers and FXCM.
According to findings by the Hong Kong regulator the mishandling originated from a segregated client funds account. The funds were held at local DBS Bank with a total of six transfers being realised over the relevant period of time.
Client Money Used for Proprietary Transactions
The money was used by the brokerage to execute proprietary transactions. After discovering that the conduct might prove to be a breach of regulatory conditions, the company recalled the funds to the segregated client funds account.
According to an official announcement made by the SFC, HPI’s use of the client funds to execute proprietary transactions represented a major breach. Due to the fact that the brokerage remitted the money back to DBS Bank after discovering that it might have breached the regulatory framework, the SFC only slapped the company with a $250,000 fine.
Throughout the investigation executed on part of the Hong Kong regulator, the company was cooperating. The SFC discovered no evidence that clients of HPI have suffered any losses,
“Safe custody of client money and client securities is a fundamental obligation of all intermediaries. Intermediaries are reminded to carefully review their internal control procedures for compliance with the CMR and the Securities and Futures (Client Securities) Rules. The SFC will continue to take action against intermediaries which mis-handle client assets,” the SFC elaborated in an official statement on the matter.
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