SFC Suspends MTF Securities and its Responsible Officer Over Suspicious Transaction Monitoring Failures
The SFC has imposed a four-month suspension on Mr. Joey Lo Wai Hon (羅偉漢) (“Mr. LO”), effective from 30 September 2025 to 29 January 2026. MR. LO, a former responsible officer (“RO”) and manager-in-charge at MTF Securities Limited (泰富證券有限公司) (“MTF”) (formerly Magusta Securities Limited), was found to have failed in overseeing credit risk management and suspicious transaction monitoring.
Failures in Credit Risk Management
MTF granted substantial trading limits to three new clients (Client A, B, and C) shortly after they opened cash trading accounts in January 2021. Each client deposited only HK$10,000, yet MTF approved limits of HK$4 million for Clients A and C, and HK$5 million for Client B—without client applications or adequate due diligence.
Notable Red Flags included:
Trading limit exceeded client’s declared annual income | No records of income proof, bank statements, trading history, or personal reputation checks. | |
Client A | — | ✓ |
Client B | ✓ | ✓ |
Client C | ✓ | ✓ |
Mr. LO, as an RO and Credit Committee member, was responsible for assessing creditworthiness and setting limits. However, he approved these at the request of MTF’s substantial shareholder without independent scrutiny, potentially risking a liquid capital deficit if the clients defaulted.
Suspicious Trading Patterns and Reporting Delays
These three clients used nearly all their limits to trade shares of a Hong Kong-listed company (“Company X”) between 22 and 27 January 2021, generating profits from HK$3.8 million to HK$5.3 million. The trades exhibited suspicious features indicative of potential market misconduct and money laundering:
- Clients bought shares at low prices just before a surge, without any apparent positive news.
- Clients sold at high prices in the first minute of the afternoon session before a 68% price collapse, followed by further declines.
- The trades accounted for 46%, 52%, and 30% of Company X’s daily turnover during the period.
- Post-trade, clients withdrew nearly all proceeds and conducted no further activity, inconsistent with their financial profiles.
The above patterns aligned with AML Guideline indicators (e.g. unusual transaction sizes, rapid withdrawals etc.)
Mr. LO did not investigate or report promptly. MTF only filed a suspicious transaction report (“STR”) to the Joint Financial Intelligence Unit (“JFIU”) in late July 2021, after SFC intervention.
**For the full details, refer to the SFC’s press release dated 2 October 2025, and Statement of Disciplinary Action.**
SIGNIFICANCE:
The SFC deemed Lo guilty of misconduct, questioning his fitness and properness. Regarding to such matter, Licensed Corporation (“LC”) should reference the below table for ensuring its compliance:
Due Diligence | LC must rigorously assess client financials before granting credit, avoiding undue influence from shareholders. |
Monitoring Systems | Implement effective, ongoing transaction reviews to detect anomalies like unusual price movements or disproportionate trades. |
Timely Reporting | Suspicious activities must be documented, investigated, and reported without delay to authorities like the JFIU and SFC. |
In June 2025, the SFC also prohibited Ms. WONG Lai Suen, another former MTF RO and executive director, from re-entering the industry for six months. (See Enforcement News – WONG Lai Suen)
This enforcement action reinforces the SFC’s commitment to upholding market standards amid evolving risks. Firms should review their policies against the Code of Conduct, Internal Control Guidelines, and AML Guideline to mitigate similar exposures.
For more information, please visit – eDon AML Transaction Monitoring System.