Hong Kong regulator fines Potomac Capital for breaching rules

Daniel van Niekerk
9 Jun, 2020
Hong Kong regulator fines Potomac Capital for breaching rules

Hong Kong's regulator, the Securities and Futures Commission (SFC) has fined Potomac Capital HK$800,000 ($103,000) for failing to comply with rules governing financial resources.

The SFC confirmed it has reprimanded and fined Potomac Capital, having discovered the wealth manager overstated its liquid capital in its financial returns from November 2016 to May 2017. The company incorrectly included fees from two clients as liquid assets in its annual filing.

Under the SFC's financial resources rules, aged fee receivables do not qualify as liquid assets.

Excluding the aged fee receivables from liquid capital calculation would have resulted in monthly liquid capital deficits for Potomac (from February to May 2017) varying from HK$335,000 ($43,000) to HK$449,000 ($58,000).

In a statement the SFC said: "It appears that Potomac had incorrectly included the aged receivables in its liquid assets, and hence overstated its liquid capital for more than three years."

Potomac Capital has subsequently corrected its filing, the regultor confirmed.

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Daniel van Niekerk

Daniel van Niekerk

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