Hong Kong’s Securities and Futures Commission (SFC) announced on Thursday the cancellation of the license granted to IDS Forex HK Limited for the company’s involvement in massive financial irregularities.
The regulator took action against the company’s two co-CEOs, Chung Wooman and Ki Bonggan, and banned them for life from re-entering the financial industry.
This final action is the extension of a regulatory order issued in 2017 that ceased all operations at the company, prohibiting the brokerage from carrying out all the activities for which it was licensed.
The action against the IDS Group subsidiary was triggered by an insider tip-off in June 2017 that revealed massive financial frauds carried out by the owner Kim Sunghun through the Hong Kong-based broker.
Kim, who was convicted and sentenced in South Korea, illegally raised funds and committed fraud. He solicited investors between 2011 and 2016, making them invest in overseas businesses, which include margin forex business. The SFC investigation found that he made capital injections of a total of $192 million into IDS Forex between 2015 and 2016.
In addition, the regulator pointed out that both Chung and Ki were aware of the irregularities and even helped Kim in executing investment decisions. Additionally, neither of them informed the SFC about the massive financial scandal even after Kim’s arrest in South Korea.
“The SFC considers that their failures in this regard show a lack of integrity and reliability on the parts of IDS Forex and its former senior management,” the regulator stated.
“The SFC’s concerns over IDS Forex’s fitness and properness are aggravated by: (i) the correlation between the timing of the fraudulent scheme and Kim’s capital injections into IDS Forex; and (ii) IDS Forex’s failure to notify the SFC within the prescribed time limit after Kim’s arrest and conviction.”