The Securities & Futures Commission has reprimanded Thomas Tong and suspended him for 10 months for breaching the code of conduct and providing misleading information.

The suspension follows an investigation into market manipulation of the shares of a listed company between September and December 2003.

The commission found Tong had told his ex-employers, BNP Paribas Peregrine Securities and BNP Paribas Peregrine Futures, and the commission, that he had met his client when he opened accounts for him with the two firms.

Tong also said it was the account holder himself who had instructed him to use another client's account to execute his trades when there was an insufficient trading limit in his account.

But Tong only met his client for the first time after he had received notification of the investigation. The accounts were opened by the account holder's brother. Without establishing the true identity of his client, Tong opened the accounts at the request of the account holder's brother and placed orders for him. The account holder himself had never given any trading instruction to Tong.

Also, Tong acted on the requests of the account holder's brother to execute his orders through an account belonging to another client of Tong. The information given to BNP and the commission previously by Tong was false and misleading.

Written authorisation

The commission also found the account holder's brother was a licensed person at the time. Tong should have obtained a written authorisation from the account holder and the written consent of the employer of the account holder's brother before he opened the trading account.

Tong's failure to comply with the code of conduct exposed BNP to the risk of disputed trades and prevented the other registered person from monitoring the trading activities of its employees.

As the fitness and properness of Tong has been called into question, the comission has decided to suspend his licence.

The commission's Executive Director of Enforcement Alan Linning said opening an account for a person without establishing his true and full identity is unacceptable, adding such information is necessary to improve transparency of trading.

"To protect the interests of his employer and market integrity, Tong should have satisfied the 'know-your-client' duties and established the true identity of the account holder before the account opening. Likewise, Tong should only accept instructions from the account holder. Accepting instructions from an unauthorised party will put the financial interest of the account holder at risk," he said.

"Honesty forms an integral part of our industry. We will never accept dishonesty on the part of licensed persons under any circumstances. Licensed persons have a legal obligation to tell us the truth during the course of our investigation. Licensed persons can expect severe penalties if they provide us with false or misleading information."