The Securities and Futures Commission (SFC) reprimanded and fined Interactive Brokers Hong Kong Limited (IBHK) HK$4.2 million for failing to comply with client asset protection rules. Between December 2017 and October 2020, IBHK improperly lent out securities belonging to 7,911 clients under expired standing authorities due to a programming error that prevented the firm from sending renewal notices. The SFC found that IBHK violated the Securities and Futures (Client Securities) Rules (CSR) and the Code of Conduct by handling client securities without valid authorization. While the breach was not deliberate and no clients suffered financial harm, the SFC emphasized the seriousness of the lapse. Mitigating factors included IBHK’s self-reporting, remedial actions, and cooperation, which led to a reduced penalty.
Resources: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=25PR57
