The Securities and Futures Commission (“SFC”), the Hong Kong Police Force (“Hong Kong Police”), the Monetary Authority of Singapore (“MAS”) and the Singapore Police Force (“Singapore Police”) have recently conducted a joint operation against an active syndicate suspected of operating a cross border ramp-and-dump manipulation schemes in Hong Kong and Singapore.
A total of 10 individuals, believed to be key members of the syndicate, including some senior executives of Hong Kong listed companies were arrested in December during searches of 33 premises in Hong Kong and Singapore involving more than 190 personnel of the SFC, Hong Kong Police, MAS and Singapore Police.
The SFC first discovered suspicious trading activities of the syndicate and suspected market misconduct offences under the Securities and future Ordinance (“SFO”) and subsequently referred the case to the MAS and the Hong Kong Police due to the schemes’ cross-border element and amount of money suspected to be involved.
This brought about the simultaneous joint operation involving securities regulators and law enforcements agencies of both countries, which is the first-of-its-kind in dealing with cross border ramp-and-dump scams.
The joint operation was conducted based on several Memorandum of Understanding entered into by the SFC with various law enforcement bodies, which includes:-
- A Memorandum of Understanding with the Hong Kong Police signed on 25 August 2017 covering matters such as referral of cases, joint investigations, exchange and use of information, , mutual provision of investigative assistance, and establishes a framework for closer collaboration on policy, operational and training issues, with a view to formalise and strengthen co-operation between the two agencies in combating financial crime.
- The Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (“EMMoU”) of the International Organization of Securities Commissions (“IOSCO”) for cross-border enforcement cooperation, under which, signatories are provided with additional tools such as mutual assistance and exchange of information in the form of the sharing of audit working papers, telephone as well as internet records, compelling attendance at interviews and providing guidance on freezing of assets.
- The bilateral Memorandum of Understanding with the MAS signed on 16 January 1997 to promote mutual assistance with the laws of both jurisdiction by the exchange of information in relation to securities and futures matters.
We are seeing an increase in investigative and enforcement actions by the SFC in 2021. The SFC’s Quarterly Report for July to September 2021 revealed the following key figures:-
- 66 in-depth inspections of licensed corporations were conducted to review their compliance with regulatory requirements.
- 2,733 requests were made for trading and account records triggered by untoward price and turnover movements.
- Six directions pursuant to Section 179 of the SFO (power to compel the production of records and documents from persons related to a listed company) were issued.
- Two licensed corporations and five individuals were disciplined, resulting in total fines of $11.95 million.
We expect the number of SFC enforcement actions will continue to rise to reflect regulator’s firm attitude in maintaining the integrity of Hong Kong’s securities and futures markets and upholding its status as a major international financial centre.
Contact us today if you require assistance with SFC regulatory matters.