The SFC has fined Enlighten Securities Limited $5 million and suspended its responsible officer, Mr. Denny Kua Kong Chak, for seven months. The failures include not setting triggers for stopping securities purchases, failing to manage margin calls, and not managing credit limits and collecting margin due. The penalties are due to failures in internal control and risk management practices over securities margin financing between May 2020 and November 2022.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On March 24, 2025, the Securities and Futures Commission ("SFC") penalized Enlighten Securities Limited ("ESL") with a $5 million fine for internal control deficiencies related to securities margin financing. Concurrently, Mr. Denny Kua Kong Chak, ESL's responsible officer, faced a seven-month suspension effective from March 21, 2025, to October 20, 2025. The SFC's investigation uncovered significant gaps in ESL's risk management practices and controls for securities margin financing between May 2020 and November 2022.
ESL's failures included: (1) neglecting to establish triggers to halt further securities purchases by clients with inadequate account equity; (2) ineffectively managing margin calls and exercising forced liquidations with insufficient documentation; (3) mismanaging credit limits for margin clients; and (4) delaying the collection of overdue margins. These shortcomings fell short of the standards outlined in the Internal Control Guidelines, the Code of Conduct, and the Guidelines for Securities Margin Financing Activities.
The SFC attributed these failures to Mr. Kua's inadequate discharge of his duties as a responsible officer and member of ESL's senior management. The penalties were imposed considering persistent control deficiencies since 2015, repeated SFC reminders, ESL and Kua's clean disciplinary records, and the need to deter similar future incidents.
ESL is licensed under the Securities and Futures Ordinance for Type 1 regulated activities. Mr. Kua has been a director since October 2003 and ESL's approved responsible officer since November 2004, also overseeing key business lines and operational controls. The SFC's guidelines for persons licensed or registered and the Code of Conduct were pertinent to the regulatory requirements in this case.
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