Market Misconduct

Overview

Hong Kong combats financial crime through various statutes – from the general criminal statute sanctioning traditional white collar crimes of theft and fraud to the complex and detailed requirements placed on financial institutions to curb misconduct in the securities market as well as money laundering and terrorist financing. This overview will consider the legislation, the powers and duties of enforcement agencies and the steps that institutions and corporations must take to comply, as well as to protect themselves from cyber threats, data breaches and handling investigations.

Market Misconduct Regulations

Market Manipulation

Insider Dealing

Short Selling

Visit our Short Selling Insight for details

How we can help

Financial Markets

White Collar Litigation

Market Misconduct Regulations in Hong Kong https://hauzen.hk/wp-content/uploads/2020/02/hong-kong-rostyslav-savchyn-NyXEqJ_qxtQ-unsplash_1400x788sm.jpg 1400 788 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 15/01/2021 15/01/2021

Market Misconduct Regulations in Hong Kong

Insight into the Securities and Futures Ordinance (Cap 571) (SFO) and its ‘dual’ approach to breaches, which can see both civil cases and criminal charges being brought.

Market Manipulation https://hauzen.hk/wp-content/uploads/2020/02/hong-kong-rostyslav-savchyn-NyXEqJ_qxtQ-unsplash_1400x788sm.jpg 1400 788 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 15/01/2021 15/01/2021

Market Manipulation

Scrutiny of issues relating to manipulation of the securities market is provided and offences which traditionally fall under this umbrella.

Insider Dealing https://hauzen.hk/wp-content/uploads/2020/02/hong-kong-rostyslav-savchyn-NyXEqJ_qxtQ-unsplash_1400x788sm.jpg 1400 788 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 15/01/2021 15/01/2021

Insider Dealing

Illicit trades are considered in detail, documenting the history of the situation in Hong Kong and the current regime. Relevant legislation is considered, along with possible sanctions and penalties.

Structure & Definitions of the Insider Dealing Provisions in SFO https://hauzen.hk/wp-content/uploads/2020/02/hong-kong-rostyslav-savchyn-NyXEqJ_qxtQ-unsplash_1400x788sm.jpg 1400 788 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 15/01/2021 20/01/2021

Structure & Definitions of the Insider Dealing Provisions in SFO

As with the provisions governing other forms of market misconduct, insider dealing is categorised into the civil regime and the criminal regime.

What Constitutes Insider Dealing? https://hauzen.hk/wp-content/uploads/2020/02/hong-kong-rostyslav-savchyn-NyXEqJ_qxtQ-unsplash_1400x788sm.jpg 1400 788 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 15/01/2021 21/01/2021

What Constitutes Insider Dealing?

Insider dealing is defined under the SFO to arise under the three circumstances and under each circumstance, inside information may originate from two kinds of sources: someone connected with a corporation or someone involved with a proposed take-over offer for a corporation.

Insider Dealing: Defences https://hauzen.hk/wp-content/uploads/2020/02/hong-kong-rostyslav-savchyn-NyXEqJ_qxtQ-unsplash_1400x788sm.jpg 1400 788 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 15/01/2021 15/01/2021

Insider Dealing: Defences

Under sections 271 and 292 of the SFO, a person or corporation may avail himself of a defence if he falls within one of the categories set out in this article.

Market Misconduct Tribunal sanctions Magic Holdings International Limited and its five directors https://hauzen.hk/wp-content/themes/crocal/images/empty/thumbnail.jpg 150 150 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 26/05/2021 26/05/2021

Market Misconduct Tribunal sanctions Magic Holdings International Limited and its five directors

On 11 March 2021, the Market Misconduct Tribunal fined Magic Holdings International Limited and five of its directors a total of $4 million after they were found to be culpable of late disclosure of inside information on L’Oréal S.A.’s proposed acquisition of Magic in 2013.

The Securities and Futures Commission (the “SFC”) reprimanded and fined Ewarton Securities Limited https://hauzen.hk/wp-content/uploads/2021/11/stairs-pexels-atypeek-dgn-5649475_1400x788.jpg 1400 788 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 03/06/2021 10/01/2022

The Securities and Futures Commission (the “SFC”) reprimanded and fined Ewarton Securities Limited

The Securities and Futures Commission reprimanded and fined Ewarton Securities Limited for internal control failings and breaches of the SFC’s Code of Conduct.

The Court of First Instance orders boiler room fraudsters to compensate investors https://hauzen.hk/wp-content/themes/crocal/images/empty/thumbnail.jpg 150 150 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 16/06/2021 19/07/2021

The Court of First Instance orders boiler room fraudsters to compensate investors

Boiler room fraudsters ordered to compensate investors after finding that none of the investments in securities / futures products agreed were ever executed.

Court of Appeal grants SFC compensation orders against former directors of EganaGoldpfeil https://hauzen.hk/wp-content/uploads/2021/10/money-pexels-tima-miroshnichenko-6266453_1401x786sm.jpg 1401 786 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 06/08/2021 10/01/2022

Court of Appeal grants SFC compensation orders against former directors of EganaGoldpfeil

Court of Appeal grants the Securities and Futures Commission $622 million compensation orders against former directors of EganaGoldpfeil (Holdings) Ltd.

SFC warns unregulated virtual asset platforms https://hauzen.hk/wp-content/uploads/2021/11/circuitboard-ryan-tpAyLp9Ro50-unsplash_1400x787.jpg 1400 787 Hauzen Hauzen https://secure.gravatar.com/avatar/89f4c19e43caa7e0225dad1d9dad1fec?s=96&d=mm&r=g 12/08/2021 10/01/2022

SFC warns unregulated virtual asset platforms

The Securities and Futures Commission warns unregulated virtual asset platforms

SFC’s Circular to licensed corporations – Operation of Bank Accounts https://hauzen.hk/wp-content/uploads/2020/09/stairs-alex-rodriguez-santibanez-AIvKJfwMcd8-unsplash_1401x788sm.jpg 1401 788 Charing Charing https://secure.gravatar.com/avatar/3b49b8bf757de52b123ffa502a0e4f5e?s=96&d=mm&r=g 25/08/2021 01/11/2021

SFC’s Circular to licensed corporations – Operation of Bank Accounts

The Securities and Futures Commission (“SFC”) issued a circular to licensed corporations (“LC”) on 28 June 2021 warning against unsatisfactory practices in the operation of bank accounts of LCs (the “Circular”).

Insurance Authority Reprimands & Fines Insurer for Contraventions of AML & CTF Ordinances https://hauzen.hk/wp-content/uploads/2021/02/bangkok-stairs-ryan-tang-8OyZGH43-p4-unsplash-sm.jpg 1400 788 Charing Charing https://secure.gravatar.com/avatar/3b49b8bf757de52b123ffa502a0e4f5e?s=96&d=mm&r=g 04/03/2022 24/03/2022

Insurance Authority Reprimands & Fines Insurer for Contraventions of AML & CTF Ordinances

MetLife (now FWD Life) & Metropolitan Life Insurance (now FWD Life Assurance) fined HK$7 million. It is clear that the IA takes these failures very seriously.

SFC Bans Mr. Poon Chun Hing From Re-entering Industry for Life https://hauzen.hk/wp-content/uploads/2020/02/hong-kong-rostyslav-savchyn-NyXEqJ_qxtQ-unsplash_1400x788sm.jpg 1400 788 Charing Charing https://secure.gravatar.com/avatar/3b49b8bf757de52b123ffa502a0e4f5e?s=96&d=mm&r=g 04/03/2022 24/03/2022

SFC Bans Mr. Poon Chun Hing From Re-entering Industry for Life

Readers are reminded to be alert if approached with securities & futures investments or dealing with anyone claiming they are licensed / registered in Hong Kong

Market Misconduct Regulations

Market Manipulation

Insider Dealing

Short Selling

How we can help

Market Misconduct Regulations in Hong Kong

Market Manipulation

Insider Dealing

Structure & Definitions of the Insider Dealing Provisions in SFO

What Constitutes Insider Dealing?

Insider Dealing: Defences

Market Misconduct Tribunal sanctions Magic Holdings International Limited and its five directors

The Securities and Futures Commission (the “SFC”) reprimanded and fined Ewarton Securities Limited

The Court of First Instance orders boiler room fraudsters to compensate investors

Court of Appeal grants SFC compensation orders against former directors of EganaGoldpfeil

SFC warns unregulated virtual asset platforms

SFC’s Circular to licensed corporations – Operation of Bank Accounts

Insurance Authority Reprimands & Fines Insurer for Contraventions of AML & CTF Ordinances

SFC Bans Mr. Poon Chun Hing From Re-entering Industry for Life

Privacy Preferences