The Ontario Securities Commission (OSC) has levied sanctions against Hamilton, Ont.-based Oasis World Trading Inc. and its proprietor, Zhen (Steven) Pang, after they admitted to not doing enough to prevent the firm’s China-based day traders from executing manipulative trades in Canada.
The OSC approved a settlement with Pang and Oasis on Monday.
Under the settlement, Pang is prohibited from serving as a director or officer of Oasis, and from being involved in proprietary trading at Oasis, for one year. He is also banned from becoming a director or officer of any issuer for one year.
Oasis has agreed to pay an administrative penalty of $225,000 to the OSC and $75,000 in costs. Additionally, the firm has retained an independent consultant to design and implement a new compliance structure at the firm.
The settlement includes admissions that Pang and Oasis, which has approximately 200 traders all based in China, didn’t do enough to prevent manipulative trading by some of their traders.
According to the settlement agreement, Oasis traders engaged in at least 460 instances of manipulative trading on Canadian securities markets between November 2013 and December 2014. The Oasis traders entered orders designed to create a misleading appearance of market activity which allowed them to trade at artificial prices, a practice known as ‘spoofing’.
Pang did not know that the manipulative trading was taking place, but that he should have known, the settlement agreement indicates, and should have done more to prevent it. “Pang, as a director and officer of Oasis, failed to adequately monitor trading activities at Oasis and ensure there was an adequate compliance structure in place to identify and prevent possible manipulative trading,” the settlement agreement says.
Oasis is a small company, the agreement notes, and the size of the penalty is “proportionately severe compared to Oasis’ revenues.” The agreement also says that Pang and Oasis accepted responsibility for their conduct and fully co-operated with OSC staff.