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Compliance & Regulation

SFC issues bans against Falcon Asset Management’s previous senior leadership

The Securities and Futures Commission has issued Ang Wing Fung, the Former Chairman of Falcon Asset Management, and the firm’s former Chief Financial Officer and company secretary, Chan Kam Wah, from re-entering the industry for life and three years, respectively.

The bans have been issued over the pair’s connection to their roles in window-dressing the liquid capital of Falcon Asset Management (Falcon).

Ang was the mastermind of the window-dressing scheme and its operation was facilitated by Chan, according to a press release by the Securities and Futures Commission (SFC).

The disciplinary action against Ang and Chan follows the SFC’s revocation of the licence of Falcon in February 2019 for window-dressing its liquid capital and other failures.  The SFC also found that Falcon provided the SFC with false or misleading information in its licence application and financial returns between June 2014 and June 2017. Ang also failed to notify the SFC of Falcon’s insufficient liquid capital and his resignation as a director.

Under Ang’s scheme, Falcon’s month-end liquid capital was window-dressed by including in its liquid capital computation the amount of cheques he drew on certain bank accounts, which were subsequently dishonoured.  This practice was adopted from the time of Falcon’s SFC licence application in June 2014.

Had the amount of these cheques issued by Ang been excluded, Falcon would have been denied a licence to carry on regulated activities due to a liquid capital deficit at the time of its licence application and at each of the month-ends over a three-year period.

Chan, who reported to Ang, had full access to various bank accounts of which Ang was a signatory.  As the person in charge of accounting, he was fully aware of the true financial condition of Falcon.  He was also aware that cheques signed by Ang would certainly be dishonored upon presentation due to insufficient funds in the bank accounts on which they were drawn and closure of some of these accounts.  But he continued to take part in the window-dressing scheme to disguise Falcon’s failure to maintain sufficient capital as required for as long as possible.

Ang subsequently resigned from Falcon on 23 October 2017, but he failed to provide the SFC with written notification of such resignation within seven business days as required.

The SFC is of the view that the misconduct of Falcon was a result of Ang and Chan’s consent or connivance, or attributable to neglect on their part as members of senior management, and should also be regarded as misconduct on their part.  Their failures cast serious doubt on their ability to carry on regulated activities competently and call into question their fitness and properness to be licensed by the SFC.