The Hong Kong Securities and Futures Commission (SFC) has fined Deutsche Securities Asia Limited (DSAL) HKD2.45 million for issuing false reports to its prime brokerage clients and delaying reporting its failures to the regulator. The SFC found that between 2006 and 2018, due to a design defect in its front office system, Deutsche Securities Asia issued false periodic statements to its clients when they took positions regarding their rights to bonus shares of listed companies that had not yet become tradable by the clients.
It appears that one of the company’s customers relied on these incorrect statements in 2018. Although DSAL immediately discovered that incorrect statements had been issued to this customer due to a defect in the system design, it did not report this malfunction to SFC until February 2019, when the internal investigation was completed.