The Hong Kong Securities and Futures Commission (SFC) has banned Mr He Zhi Hua, former chief executive officer of Ping An of China Securities (Hong Kong) Company Limited (Ping An), for 12 months from any regulated activities due to his role in contributing to serious internal control deficiencies and other matters at Ping An between August 2010 and April 2011.

An SFC investigation concluded that Mr He acted as a nominee and was complicit in a number of suspicious transactions that should have been, but were not, reported to the SFC and the Joint Financial Intelligence Unit in a timely manner.

In addition the SFC found that Mr He failed to ensure that:

• Ping An had in place sufficient anti-money laundering internal control procedures and training to its staff; and
• appropriate and effective procedures existed to
  • (i) protect client assets in effecting payments; and proper communication and
  • (ii) enforce Ping An’s internal policies on employee dealings and account opening procedures.

The SFC noted that Mr He, who was the most senior person at Ping An, and in a position of authority in managing its business at the relevant period, tried to abdicate responsibility and to blame to subordinates when these deficiencies were uncovered.

The management conflict with his subordinates aggravated the internal control deficiencies.

Mr Mark Steward, Executive Director of Enforcement, SFC, said

“The SFC will hold senior management accountable for internal control deficiencies where it is clear they are involved and responsible”.

A copy of the SFC press release is available.