Hong Kong Securities and Futures Commission fines Saxo Financial HKD 4 million for distributing virtual asset products to retail clients in violation of regulations

Foresight News reports that according to the Hong Kong Securities and Futures Commission (SFC), the SFC has condemned and fined Sanford Financial (Hong Kong) Limited (Sanford Financial) HKD 4 million for deficiencies in distributing unapproved virtual asset funds and virtual asset-related products (collectively referred to as virtual asset products) on its online trading platform. Between November 1, 2018, and November 25, 2022 (the relevant period), Sanford Financial allowed retail clients to buy and sell several virtual asset products on its online platform. According to two circulars issued by the SFC to intermediaries that took effect during key periods, these products should only be sold to professional investors. The SFC’s investigation found that during the relevant period, Sanford Financial executed 1,446 transactions involving 32 virtual asset products for six individual professional investors and 130 retail clients on its online platform. All of these products were complex products, including 21 exchange-traded derivatives (exchange-traded derivative virtual asset products). Prior to executing these transactions, Sanford Financial did not assess whether clients had the knowledge to invest in virtual asset products, nor did it provide sufficient information or specific warnings about virtual assets, thus failing to comply with the guidelines set out in the two SFC circulars.