A bank trader convicted in a multimillion-dollar fraud in Hong Kong was arrested as she was trying to leave with her mother to Toronto, a court decision this week has revealed.
Shirlina Tsang Pui Yu pleaded guilty to fraud last fall after her employer discovered that she systematically entered false records to conceal her trading losses.
On Tuesday, the Hong Kong Court of Appeal reduced her sentence to four years minus two months.
She was employed in Hong Kong as a trader on the emerging-markets desk of the Royal Bank of Scotland.
The appellate court said in its ruling that Ms. Tsang was arrested at Hong Kong International Airport as she and her mother were about to board a flight to Toronto. Her parents reside in Canada.
The court heard that her fraudulent behaviour cost the bank nearly $36-million in losses.
She persuaded the Court of Appeal to cut four months off her initial sentence of 50 months because the trial judge had failed to taken into account that she repaid $149,000 she received in employment bonuses.
According to court evidence, for several months in 2011, Ms. Tsang falsified her trade entries into the RBS computer system, either citing incorrect prices or counterparties who had not in fact agreed to make a trade.
After 7 p.m., once the bank’s computer had tabulated the traders’ profit and loss, she would then cancel or amend her fake entries before the trade settlement took place.
Ms. Tsang would log on to the bank’s computer via remote connection to rectify her bogus transactions during the evening, sometimes as late as 2 a.m., according to the Hong Kong Securities and Futures Commission.
“There were no monitoring or reporting controls to capture Tsang’s remote access use and therefore her trade cancellations and amendments in the early hours of the morning or late at night went undetected,” the commission said in a statement of disciplinary action.
Earlier this spring, the financial regulator reprimanded the RBS and fined the bank $847,000 for inadequate oversight.
According to the court decision, Ms. Tsang also circumvented the bank’s Independent Pricing Verification monitoring system, which twice a month compared the prices that have been keyed in by the RBS traders and the market prices for securities published by two independent brokers.
She did it by supplying false bond prices to the brokers responsible for updating the published market prices, the court decision said.
Ms. Tsang’s illicit trading was discovered by a supervisor on Oct. 14, 2011. She told her supervisors that she had been distraught by the poor market conditions and her brother’s death from cancer in March.
She was fired the same day and Hong Kong police notified.
“She was arrested at Hong Kong International Airport on 17 October 2011 as she was trying to catch a flight with her mother to Toronto,” the judgment of the Court of Appeal said.
“Both she and her mother had purchased only one-way tickets.”
Ms. Tsang was 42 when she pleaded guilty last fall. She was born in Hong Kong, but the family moved to Canada in 1988. She returned to Hong Kong in 1994 after obtaining a degree in economics from the University of Toronto.
“She worked for RBS since 2004 but said she was constantly under work stress from 2008 due to a heavy workload and matters in her personal life,” the latest court judgment said.
The appellate court said there is no risk that Ms. Tsang will reoffend because she is unlikely to be trusted with someone else’s money again. Nevertheless, it said it could not be too lenient toward her because of the way she actively and repeatedly tried to circumvent the bank’s safeguards.
“This is dishonesty and breach of trust on a grand scale and there is no doubt in our mind that the applicant’s conduct was of a very high level of culpability and this must be reflected in the punitive element of the sentence,” the judgment said.