The Hong Kong Securities and Futures Commission (SFC) has declared a 10-year exclusion from the financial services industry for Philip John Shaw, formerly the Head of Pan-Asia Execution Services of Citigroup Global Markets Asia Limited (CGMAL).
The Securities and Futures Commission (SFC) of Hong Kong recently barred Citigroup Global Markets Asia Limited (CGMAL) executive, Wilson Shaw, from the securities industry. This ban follows sanctions imposed on the company for regulatory infractions and internal control inadequacies.
According to the Hong Kong regulator, the bank’s Cash Equities business allowed multiple trading desks to circulate misclassified Indications of Interest (IOIs) and make false statements to institutional customers when executing facilitation trades. Such breaches reportedly occurred between 2008-2018 and have been attributed to Shaw’s inability to fulfill his obligations as a part of the higher management.
Shaw apparently set up a system to streamline the creation of mislabeled IOIs for the Equities Sales Trading Desk of CGMAL, which included some of the market’s most heavily traded blue-chip stocks.
These IOIs were not backed by any potential orders or interest from particular clients, but were rather designated as “Natural” and “In Touch With” to draw in client inquiries. Despite numerous complaints from clients regarding the accuracy and quality of the IOIs, Shaw disregarded them and falsely asserted that they were classified according to industry standards.
SFC’s Executive Director of Enforcement, Christopher Wilson, said:
A key concern of the SFC is that Shaw had, through his misconduct, engendered a culture of chasing revenue at the expense of client interests and basic standards of honesty within CGMAL. In the circumstances, his conduct fell far short of the standards expected of a member of senior management of a licensed intermediary and the sanction against him is warranted.
He added:
The disciplinary action against Shaw also underscored the SFC’s determination to hold errant senior management accountable for their firms’ failures. This is imperative for driving changes in the culture and behavior of intermediaries.
Since at least 2015, Shaw has provided incorrect details to customers or taken deliberate steps to cover up the true nature of the trade.
The SFC also uncovered that the prohibited individual made faulty statements, stayed quiet or was not explicit with the customer about the participation of the Facilitation Desk, and failed to obtain the customer’s authorization prior to directing the order to the Facilitation Desk for execution. Furthermore, he misrepresented the client to uphold the falsehood created by the mislabeled IOI.,
