23rd Apr 2014 06:29
LONDON (Alliance News) - Royal Bank of Scotland Group PLC was Tuesday fined HKD6.0 million by Hong Kong regulators as a result of internal control failures relating to detecting and preventing unauthorised trading by its emerging-markets rates business in Hong Kong.
The fine by the Hong Kong Securities and Futures Commission follows an investigation into the systems and controls of the UK bank's emerging markets rates desk in 2011 after unauthorised trading by one of its traders was discovered.
On October 15, 2011, RBS contacted the regulator to report concerns about unauthorised trading activities by Shirlina Tsang Pui Yu, who on August 30, 2013 was convicted of one count of fraud and sentenced to four years and two months? imprisonment.
Tsang worked on its emerging markets rates desk in RBS's Hong Kong branch.
RBS had discovered anomalies in Tsang?s trading but did not know their scale or the size of any losses, the regulator said.
Tsang's unauthorized trading and mis-marking activities, which had taken place over a three-year period, was later found to have caused GBP24.4 million in losses to RBS, the regulator said.
Tsang concealed the losses by mis-marking her bond positions and booking, cancelling and amending fictitious bonds and futures trades in RBS?s internal systems, the regulator said.
The regulator said that although Tsang?s misconduct was the primary cause of the losses to RBS,
the bank's risk management and controls over the desk were deficient and failed to prevent misconduct like Tsang?s.
The investigation found inadequate and ineffective front office supervision, amongst a number of other failings.
"RBS acted quickly in alerting the Securities and Futures Commission on a Saturday afternoon which in turn led to action being taken that prevented Tsang from leaving Hong Kong. This deserves substantial credit and is the reason why today?s sanctions are not heavier ones," said Mark Steward, the Securities and Futures Commission's executive director of enforcement.
By Samuel Agini; [email protected]; @samuelagini
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