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CFI Upheld SFC’s Search Warrant and Sharing of Seized Materials with CSRC

On 8 December 2017, the Court of First Instance (CFI) delivered its decision dismissing the judicial review application by an individual who is the subject of an investigation by the Securities and Futures Commission (SFC) regarding a search warrant obtained by the SFC against him and the SFC’s subsequent decision to share the information obtained on the search with the China Securities Regulatory Commission (CSRC).  This case highlights the increasing cross-border cooperation between the SFC and CSRC and that documentary evidence in Hong Kong will be within the reach of CSRC.


Tang Hanbo (Tang) was a PRC national residing in Hong Kong, who was investigated by the SFC in relation to his trading of shares in a Hong Kong listed company, Aluminium Corporation of China Ltd.  The investigation was in relation to potential breaches by Tang of the Hong Kong Codes on Takeovers and Mergers and Share Buybacks, the disclosure of interests requirements in Part XV of the Securities and Futures Ordinance, Cap. 571 (SFO) and section 300 of the SFO.  At the same time, the CSRC was investigating Tang in the PRC in relation to this trading in the shares of Zhejiang China Commodities City Group Co Ltd.

The CSRC sent four letters to the SFC on 14 June 2016, 23 August 2016, 9 September 2016 and 14 September 2016 respectively, to request the SFC’s assistance with its investigation.  On 27 July 2016, the SFC obtained a search warrant against Tang.  When making the application for a search warrant, the SFC did not disclose information about the joint investigation with CSRC to the Magistrate.  The warrant was executed on 28 July 2016, when the SFC searched Tang’s residence.  Subsequently, the SFC informed the CSRC about the materials that had been seized, arranged for the CSRC officers’ inspection of the materials relevant to their investigation and transmitted certain seized materials to the CSRC.  Subsequently, the CSRC issued penalty notices to Tang on the basis of materials seized from the SFC’s search of Tang’s residence, and Tang was eventually convicted in the PRC.

Tang applied for judicial review of the search warrant and the SFC’s decision to share materials seized during the search of Tang’s residence pursuant to the search warrant on the basis that the search warrant had been obtained by material non-disclosure and a misleading description of the true purposes for the search warrant, i.e. to assist CSRC’s investigation and not the SFC’s own investigation.


The Court found that there was no reason for senior officers of the SFC to deliberately mislead the Magistrate by withholding from her the true purpose of the warrant.  The Court referred to the International Organization of Securities Commissions Multilateral Memorandum of Understanding (MMoU) and the Memorandum of Understanding between the CSRC and the SFC on Strengthening of Regulatory and Enforcement Cooperation under Shanghai-Hong Kong Stock Connect (MoU).  The MMoU and the MoU provided, inter alia, that the CSRC and the SFC would alert each other to any information concerning suspected misconduct in the other’s market and notify each other when they commence an investigation with a cross-boundary element.

Based on an examination of the contemporaneous evidence, the Court found that no joint task force or agreement to conduct a joint search was formed between the CSRC and the SFC and concluded that the SFC was only conducting its own investigation and cooperating with the CSRC at the same time.  The CFI found that there was no material non-disclosure by the SFC, i.e. the search warrant was obtained lawfully, and that the SFC was entitled to share information obtained in its investigation with the CSRC.  Had there been a request from the CSRC to carry out a search for their investigation, the SFC would have been entitled to assist CSRC in their investigation and would have expanded the scope of the search warrant to include both the SFC’s investigation and CSRC’s investigation.  The CFI dismissed Tang’s application.


This case is a good example of cross-border cooperation between the SFC and the CSRC in their investigations and enforcement actions.  The judgment of the CFI affirms the power of the SFC to assist and facilitate the CSRC in the latter’s investigations, and to share the materials and intelligence obtained in its own investigations with the CSRC.  Documentary evidence in Hong Kong is not beyond the reach of CSRC.

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Peter So

Partner | Litigation and Dispute Resolution

Email or call +852 2825 9247

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