The SFC’s new Executive Director of Enforcement, Thomas Atkinson, has recently announced the setting up of eight specialised teams to investigate cases in the following key areas that pose particularly serious threats to the integrity of the Hong Kong markets:
1. Corporate Fraud Team
2. Corporate Misfeasance Team
3. Insider Dealing and Market Manipulation Team
4. Intermediary Misconduct Team
5. Sponsor Team
6. GEM (Growth Enterprise Market) Team
7. AML Team
8. Specific Products Team
1 to 4 are permanent teams. This reflects the regulator’s expectation that there will be a constant flow of cases in these important areas in the foreseeable future. 5 to 8 are temporary teams to tackle emerging risks in these new areas of importance. These teams are expected to be disbanded when the underlying risks have been addressed.
These teams will be made up of experienced professionals in the areas, as well as specialists with relevant expertise and special skills, such as market analysis and investigation. The impetus for the new set up comes from the rapid increase in enforcement cases (an increase of 20% a year). This has called for a new approach, Atkinson says, from a “try to do everything” approach to a focused approach, targeting key risk areas.
Last month, the Process Review Panel issued a report for the SFC. In the report, it was mentioned that some enforcement cases have taken quite a long processing time. The backlog of cases and an increasing number of new cases are some of the immediate matters that Thomas Atkinson has had to tackle since his arrival in Hong Kong earlier this year. The establishment of the specialised teams has given the market a clear message about the high impact cases that the SFC will be putting its resources into to tackle and we should see more of such cases in Court, in the Market Misconduct Tribunal or in SFC Press notices announcing sanctions imposed on licensed entities/persons.
More information about the eight teams:
Collaboration with China Securities Regulatory Commission (“CSRC”)
Given that many Hong Kong listed companies have business operations in Mainland China, Thomas Atkinson said that the SFC will work closely with Mainland regulators, especially the CSRC. In our experience, this is inevitable as more and more cases require the SFC to obtain information and evidence from individuals and companies based in the Mainland.
Deacons regularly advises clients on SFC Enforcement cases and issues. Please contact us if you require advice on any regulatory issues.