The Securities & Futures Commission has reprimanded and fined Sun Growth Securities $120,000, and its responsible officers Stephen Ng and Kao Wing-lun $221,000 and $64,000, for internal control failings.

The commission received a complaint in July 2003 relating to the alleged misappropriation of client funds by an ex-Sun Growth account executive.

Its investigation found a number of internal control failings in the company's operation, including:

* lacking a well defined and segregated function for each department;

* inadequate guidelines to and supervision of staff in dealing procedures;

* inadequate cross checking of account opening documentation for new clients and subsequent change of client details;

* failure to provide a copy of the Client Agreement to clients and failure to keep track of and update records and documentation of clients; and,

* no formal procedure to handle clients' complaints.

The commission's Executive Director of Enforcement Alan Linning said misappropriation or alleged misappropriation of client monies will undermine the strength and confidence the investing public places in the system of licensed corporations and brokers.

"Sun Growth's internal controls were severely lacking and the ultimate responsibility lay with the responsible officers to put in place the very best possible checks and balances. Those who fail to do so will be held accountable to us and will face disciplinary sanction. All licensed corporations must be vigilant at all times to misappropriation and other fraudulent acts."