The Hong Kong Securities and Futures Commission has reprimanded and fined Bright Smart Securities International (H.K.) Limited HKD 2.8 million for failing to maintain adequate and effective internal controls to monitor and detect wash trades by its clients. The regulator found the firm breached the Code of Conduct and acted contrary to the interests of market integrity by allowing 1,021 pairs of wash trades involving 736 stocks and warrants through 615 client accounts between 1 November 2023 and 13 September 2025. Before March 2024, the firm relied mainly on post-trade monitoring and manual reviews, which allowed clients to carry out wash trades before they were detected. A pre-trade interception arrangement introduced in March 2024 remained inadequate because it still depended on manual intervention rather than automated controls, was triggered only after a second wash trade was detected, and counted multiple wash trades in the same client account on a single day as one instance. That allowed clients to execute multiple pairs of wash trades in one day without restriction. In setting the sanction, the Securities and Futures Commission took into account that the firm had previously been reminded to strengthen the relevant controls and that similar deficiencies had repeatedly been identified but not fully rectified. It also noted that the firm has enhanced its systems and controls, has undertaken to appoint an independent reviewer to verify the effectiveness of those measures, and cooperated in resolving the regulator's concerns.

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