Hong Kong SFC Fines KTF Capital Management Limited $400,000 for Regulatory Breaches

The Securities and Futures Commission (SFC) has reprimanded and fined KTF Capital Management Limited (KTFCM) (formerly known as Forchn International Asset Management Co. Limited and Rega Technologies Limited) $400,000 for failures to comply with the Securities and Futures (Financial Resources) Rules (FRR).

The SFC found that KTFCM failed to maintain its required liquid capital of approximately $2.8 million between 13 and 18 December 2018 and notify the SFC when it became aware of its inability to comply with the financial resources requirements.  

It transpired that the almost $20 million deficit in KTFCM's liquid capital was the result of an oversight in that it failed to anticipate its proprietary trading in shares would trigger adverse implications to its liquid capital calculation under the FRR.

The SFC is of the view that KTFCM's conduct was in breach of the Code of Conduct.

In deciding the sanction, the SFC took into account all relevant circumstances, including:

• ​The FRR regime represents significant statutory safeguards for the interests of the investors in the market;

• ​KTFCM's liquid capital deficit was significant in light of its operations but lasted for only a short period of time;

• ​KTFCM misrepresented to the SFC that it maintained sufficient liquid capital during the relevant period by backdating a relevant agreement;

• ​KTFCM's cooperation with the SFC in resolving the disciplinary proceedings;

• ​KTFCM's financial situation; and

• ​KTFCM's otherwise clean disciplinary record.