Hong Kong’s Securities and Futures Commission (SFC) has suspended Christopher James Aarons, responsible officer (RO) and chief executive officer of hedge fund Trafalgar Capital Management (HK) Ltd (Trafalgar), for two years from 27 September 2022 to 26 September 2024 after the Securities and Futures Appeals Tribunal (SFAT) upheld the SFC’s disciplinary action against him for breaches of the SFC’s Code of Conduct.
The SFC’s disciplinary action followed administrative proceedings against Aarons in South Korea. The Korean regulatory authorities found that Aarons had breached Korean legislation by dealing in the shares of a securities company listed on the Korea Exchange (KRX) based on material non-public information in circumstances that prohibited such dealing.
The information concerned a block trade of shares of the KRX-listed securities company which Aarons had obtained from a sell-side broker during a “market sounding” call in January 2016 that preceded the public announcement of the block trade.
It was determined in the Korean proceedings that although the name of the securities company was not mentioned during the call with the broker concerned, there was nevertheless sufficient particularity in the information that was imparted to enable Aarons to satisfy himself that the information must relate to the company.
Aarons was not wall-crossed during the call with the broker, but he cut short the call with the broker and arranged short swaps in the company’s shares about 20 to 25 minutes after he had obtained the information from the broker.
The SFC found that Aarons’ conduct was such that he was not a fit and proper person to continue to be licensed as a representative or to remain as an RO of Trafalgar, having regard to General Principles 1 and 7 of the Code of Conduct.
The SFAT also upheld the SFC’s decision to suspend Aarons’ licence to act as a representative and his approval to act as an RO, but varied the period of the suspension from three years to two years.
