The Royal Bank of Scotland (RBS) has been reprimanded and fined by Hong Kong’s Securities and Futures Commission (SFC) over its failure to detect and prevent unauthorized trading activities in its Emerging Markets Rates business in the city in 2011.
The $6m fine follows an SFC inquiry into the systems and controls around the bank’s emerging markets rates desk in 2011, after the discovery of unauthorized trading activities by one of its former traders, Shirlina Tsang Pui Yu.
Carried over a three-year period, Tsang’s unauthorized trading and mis-marking activities caused substantial losses to RBS amounting to £24.4m.
The investigation found that RBS’s systems and controls at the Emerging Markets Rates business were "seriously inadequate and revealed significant weaknesses in its procedures, management systems and internal controls."
The regulator, however, appreciated RBS’ quick action in alerting the authorities once it had discovered the illegal trade in October 2011, which prevented Tsang from leaving Hong Kong.
SFC Enforcement executive director Mark Steward said, "This deserves substantial credit and is the reason why today’s sanctions are not heavier ones."
RBS said in a statement, "We put in place a comprehensive remediation programme that strengthened our governance and supervisory oversight, and our control environment."
Tsang was convicted of fraud and sentenced to 50 months in prison, in 2013.