Section 378 of the Securities and Futures Ordinance (SFO) imposes an obligation on a person assisting the Securities and Futures Commission (SFC) in a statutory enquiry or investigation to preserve secrecy with regard to any matter coming to its knowledge.
The SFC has issued a set of frequently asked questions (FAQs) to provide practical guidance on the application of the secrecy provisions in the context of licensed corporations (LCs) providing assistance to the Intermediaries Supervision Department of the SFC (ISD) in its performance of supervisory functions. Specifically, the SFC has issued guidance that outlines its view on the application of the secrecy provisions to enforcement related matters. The guidance is available here and the FAQs are available here.
Examples of information, records or documents that may typically be disclosed to LCs and subject to the statutory secrecy provision include (i) the fact that on-site reviews will be, are being or have been conducted by the ISD and the findings of such reviews; (ii) correspondence issued by the ISD to LCs, including requests for information and letters of deficiencies; and (iii) the responses provided by LCs to the ISD.
There are a number of exceptions to the secrecy obligations which are relevant to persons (including LCs) assisting the SFC. For example, secrecy does not apply to (i) information which is already available to the public; (ii) information which is disclosed in connection with judicial proceedings to which the person is a party; (iii) where the disclosure is required under a court order or other laws; or (iv) where the SFC has given its consent in writing to the disclosure of the matter.
The SFC considers that its written consent will not be required for disclosure of supervisory information by an LC to certain professional advisers – specifically:
However, an auditor, counsel, solicitor or other professional adviser who receives supervisory information from the LC shall not disclose such information to any other person, unless the SFC consents to such onward disclosure, or where another exception under section 378 of the SFO applies.
It is a criminal offence to breach the statutory secrecy obligation, the maximum penalty for which is a fine of HK$1 million and imprisonment for up to two years. LCs may, in addition, be subject to disciplinary actions.
In addition to the SFO, LCs should be mindful of other applicable laws and regulations (such as the Personal Data (Privacy) Ordinance) that may limit the use or disclosure of certain information, and ensure compliance with the relevant requirements when disclosing such information.