Hong Kong’s Securities and Futures Commission (SFC), the country’s paramount securities regulator, has launched a new action against IDS Forex HK Limited, issuing a Restriction Notice against the brokerage and asset manager following the latest developments surrounding allegations of fraud and role of the group’s sole shareholder Kim Sunghun.
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IDS Forex HK Limited is a subsidiary of IDS Group in South Korea – the group had already been under the focus of SFC following a self-report notification published by the group itself. Back in February 2017, Mr. Kim, the group’s principal shareholder had been sentenced to twelve years imprisonment following his conviction of illegal fund-raising and fraud in South Korea.
The nature of the deepening scheme lasted as far back as 2011, with Mr. Kim effectively duping customers in an offshore scheme that included margin FX business. The conviction factored in extensively towards the SFC’s most recent action, as the regulatory authority felt there was sufficient grounds to believe that the capital injections made by Mr. Kim into IDS Forex HK may be the proceeds of illicit activity, and may also represent an attempt to launder proceeds.
Cessation of Operations
Today’s Restriction Notice on IDS Forex HK Limited will essentially halt all operations at the group, prohibiting the brokerage from carrying out all activities for which it is licensed. This includes offering leveraged FX trading, advising on securities, and asset management. Following an initial investigation by the SFC into Mr. Kim’s activities, the group discerned that IDS Forex HK did not properly conduct business operations during a period over at least the past three years that was requisite of a fit and proper licensed corporation – IDS Forex HK Limited has been licensed by the SFC for the past several years.
Moreover, the Restriction Notice also bars IDS Forex HK from dealing with any assets held by it or held on behalf of its clients without the SFC’s prior written consent. The SFC investigation will continue despite the recent issuing of the notice today, during which IDS Forex HK will be unable to conduct any previously regulated activity. It is likely that the regulator has reason to suspect of a deeper scheme across the group’s business, which it has not yet uncovered, given the role and link of Mr. Kim over the past few years.
The SFC also deemed the cessation of financial activities by IDS Forex HK to also be of benefit to customers, especially in light of an active an ongoing investigation into the nature and extent of fraud. The allegations are outlined in a recent manifest provided by the SFC, detailing the initial findings of its investigation against the group.
Source: Finance Magnates