Hong Kong Securities and Futures Commission: Bans former Citigroup Global Markets exec Richard Charles Heyes from re-entering the industry for five years.

On September 16, the Securities and Futures Commission of Hong Kong banned Richard Charles Heyes, former head of Citigroup Global Markets Asia Limited (Citigroup Global Markets), key business core function manager, board member and pan-Asia equities head, from re-entering the industry for a period of five years, from September 15, 2025 to September 14, 2030. Prior to taking the disciplinary action mentioned above, the Securities and Futures Commission had already disciplined Citigroup Global Markets for allowing multiple trading desks under its equities business unit to send mislabeled purchase intentions to institutional clients between 2008 and 2018, as well as making false statements to these clients during the execution of facilitated trades, thereby seriously violating regulatory requirements and internal control deficiencies. The Securities and Futures Commission considered that the violations and deficiencies of Citigroup Global Markets could be attributed to Heyes not fulfilling his duties as a responsible person, core function manager, and senior management member of Citigroup Global Markets. Mr. Christopher Wilson, Executive Director of Enforcement at the Securities and Futures Commission, said: "The primary responsibility of licensed corporations' senior management is to ensure that the company maintains appropriate standards of conduct and compliance with relevant procedures. Heyes, while exerting significant pressure on the trading desks to increase Citigroup Global Markets' market share, failed to remain vigilant of clear signs of dishonest means used by his subordinates to achieve this objective, demonstrating a dereliction of duty and a failure to properly discharge his management responsibilities. As a result, the misconduct of his subordinates was allowed to persist due to his serious negligence, fostering a culture within Citigroup Global Markets that sacrifices client interests and fundamental integrity standards in pursuit of profits." Mr. Wilson continued: "The Securities and Futures Commission will actively use the Core Functions Supervisory System to identify underperforming senior management members and hold them accountable for their company's deficiencies, in order to drive intermediaries to change their culture and behavior." Mislabeled purchase intentions The investigation by the Securities and Futures Commission revealed that Heyes should have known that the stock sales trading desks of Citigroup Global Markets routinely sent out mislabeled purchase intentions to clients to prompt inquiries. While the Securities and Futures Commission had highlighted other concerning issues in the purchase intentions process of Citigroup Global Markets during a limited inspection in 2014, Heyes did not ensure that Citigroup Global Markets had implemented sufficient and effective monitoring measures regarding the issuance of purchase intentions. Furthermore, despite receiving reports from his subordinates between 2017 and 2018 documenting complaints from clients about the quality and accuracy of Citigroup Global Markets' purchase intentions, he took no steps to investigate these client complaints and therefore did not take action to stop the practice of the trading desks issuing mislabeled purchase intentions. His shortcomings allowed the dishonest behavior of the desks to persist. Making false statements and failing to disclose the nature of facilitated trades In mid-2014, Heyes attended a roundtable meeting with the Securities and Futures Commission, during which the Commission outlined common issues discovered in the market involving facilitated client activities, including a lack of express client consent. However, he did not ensure that Citigroup Global Markets had adequate internal guidance and compliance oversight to verify whether the traders had made pre-trade disclosures about Citigroup Global Markets' principal status in facilitating trades and obtained client consent. Furthermore, the Securities and Futures Commission found that Heyes should have been aware from emails sent or forwarded to him by his subordinates that traders were making false statements to clients to increase market share, labeling facilitated trades as agency trades. However, due to his failure to note these emails, the misconduct of the traders went unchecked. The investigation results mentioned above indicated that Heyes did not ensure that Citigroup Global Markets maintained appropriate standards of conduct and compliance with relevant procedures. His failures included not ensuring the establishment of sufficient policies and systems monitoring measures to effectively monitor the issuance of purchase intentions by Citigroup Global Markets, comply with the relevant consent and disclosure requirements for facilitated trades, and provide adequate training to the traders. In deciding to take the disciplinary action mentioned above, the Securities and Futures Commission took into consideration all relevant circumstances, including: - Heyes' serious negligence in fulfilling his management and supervisory duties, leading to severe internal control deficiencies and regulatory violations at Citigroup Global Markets persisting for over a decade - His conduct falling below the standards expected of licensed persons, key function managers, board members, and senior management members - The need to send a strong message to the industry that the Securities and Futures Commission will not tolerate misconduct like that committed by Heyes - Heyes' cooperation, acceptance of the disciplinary action by the Securities and Futures Commission, and withdrawal of an appeal to the Securities and Futures Appeals Tribunal, as well as his lack of disciplinary record in the past Records show that Heyes was licensed under the Securities and Futures Ordinance to conduct regulated activities in Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), and Type 7 (providing automated trading services). He was affiliated with Citigroup Global Markets as a licensed representative from March 30, 2012, and was approved as a responsible person from October 15, 2013, to July 1, 2020. He also served as the key business (equities) core function manager at Citigroup Global Markets from July 12, 2017, to July 1, 2020. Heyes is not currently a licensed person of the Securities and Futures Commission. In a previous press release on January 28, 2022, the Securities and Futures Commission condemned Citigroup Global Markets Asia Limited (Citigroup Global Markets) and imposed a fine of HK$348.25 million on the company for allowing multiple trading desks under its equities business unit to send mislabeled purchase intentions to institutional clients and make false statements to these clients during facilitated trades between 2008 and 2018.