The Securities and Futures Commission (SFC) has banned Mr Wang Can, a formerlicensed representative of China Galaxy International Securities (Hong Kong) Co.,Limited (CGIS), for 30 months for misconduct (Note 1). The SFC found that Wangasked his friend to open a securities account in September 2014 and conductedpersonal trading in that account for at least nine months. Wang became privy toinformation regarding a proposed acquisition of Linmark Group Limited (Linmark) inNovember 2014 when he assisted CGIS to prepare pre-engagement documentationfor a potential client. He went on to purchase shares of Linmark through his friend'saccount and sold them two days after Linmark announced the proposed acquisitionon 3 December 2014 and made a profit of $7,800 (Note 2). Wang breached CGIS'staff dealing policy by failing to disclose to his then employer his personal tradingactivities and beneficial interests in his friend's account. He also breached CGIS'sstaff dealing policy in that employees are prohibited from trading on the basis ofprice sensitive information or confidential information related to its clients orpotential clients (Notes 3, 4 & 5). Wang was fined $7,800, equivalent to the profitsthat he gained from trading in the shares of Linmark (Note 5). In deciding thesanction, the SFC took into account all relevant circumstances, including Wang'sremorse and willingness to accept the SFC's disciplinary action.Notes:1. Wang was licensed under the Securities and Futures Ordinance to carry onType 1 (dealing in securities) and Type 6 (advising on corporate finance)regulated activities and was accredited to CGIS from 9 April 2013 to 6 February2016. Wang is banned from 16 May 2019 to 15 November 2021.2. Linmark (currently known as Daohe Global Group Limited) was listed on TheStock Exchange of Hong Kong Limited at the material time.3. Paragraph 9.3 of the Code of Conduct for Persons Licensed by or Registeredwith the SFC (Code of Conduct) requires licensed corporations to have in placeprocedures to ensure that their employees do not deal (for the benefit of thelicensed corporation, employee or client) in securities where the employeeconcerned effects the dealing on the basis of non-public information whichwould be expected to materially affect the prices of those securities and whichis to be released to the market.4. Paragraph 12.2 of the Code of Conduct requires licensed corporations toimplement procedures and policies on employee trading and to actively monitorthe trading activities in their employees' accounts and their related accounts.5. General Principle 1 (honesty and fairness) of the Code of Conduct provides thata licensed person should act honestly, fairly, and in the best interests of itsclients and the integrity of the market.Question :Explain whether "Unacceptable" is correct or incorrect with respect to the relevantStandard. State the key points of the case that relate to the relevant Standard inyour own words.

"The securities and futures industry is highly regulated to promote fairness, transparency, and…

Answered: Explain whether "Unacceptable" is…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Explain whether "Unacceptable" is correct or incorrect with respect to the relevant Standard. State the key points of the case that relate to the relevant Standard in your own words.