- Can I request my brokerage to ask another brokerage to sell my shares? Or should I approach another brokerage myself?
The brokerage may arrange for another brokerage to execute its trades. Alternatively, you may instruct the brokerage to transfer your stocks, warrants etc to another brokerage, with which you have already opened a stock account, for dealing through that other brokerage.
- Will my shareholding and trading records in the brokerage be destroyed? If no back-up information is available, will the brokerage need to freeze its clients' accounts to rebuild the database?
Brokerages are generally expected to have contingency plans such as back-up data storage.
- In case my brokerage finally goes into liquidation, can I get back my money and stocks and when? Is there any difference in terms of compensation for cash clients and margin clients?
In general, cash clients should be able to get back their monies and stocks, which have been properly segregated by the brokerage reasonably quickly. However, the exact timing will depend on the particular circumstances of the case.
The Investor Compensation Fund, the statutory investor compensation scheme, does not draw any distinction between cash clients and margin clients. Presently, no matter how many different types of accounts a client may have with a brokerage, each client is to be compensated up to a maximum of $150,000, but covering only exchange-traded products in Hong Kong based on amounts as determined by the Investor Compensation Company.
- A leading brokerage fails to represent the interests of a large number of clients in respect of corporate actions of a listed company. Do these clients have the power to declare any voting result void which was made without their presence (i.e. in proxy by the brokerage)?
Any failure by the brokerage to act in accordance with instructions is unlikely to make the vote at a general meeting invalid. Where clients have not taken up their rights under a rights issue, they are unlikely to be able to require the listed company to issue them with shares.
If the brokerage has not acted in accordance with the instructions of its clients who hold shares, or where clients have not received their rights as shareholder because of the brokerages negligence, the clients may be able to seek damages from the brokerage.
If the shareholders consider that the affairs of the company are being or have been conducted in a manner unfairly prejudicial to the interests of some of its shareholders, they may apply to the court for an order under s168A of the Companies Ordinance to stop the conducting of any such affairs.
In any event, legal advice should be sought regarding the situation.
IEC - Market contingencies