On 17 August 2021, Hong Kong’s Securities and Futures Commission (SFC) issued its Q2 2021 Quarterly Report, covering key regulatory developments and providing insight into the latest enforcement trends during the period between April and June 2021.
The major enforcement trends and themes reflected in the SFC’s Q2 2021 Quarterly Report are summarised in the tables and sections below.
Highlights of the recent enforcement actions
Key trends in relation to the SFC’s recent enforcement activities
The SFC continues to be highly active in its enforcement activities and we have observed upward trends (compared to this time last year) in:
- the number of enquiries raised (substantial increases of between 50-100% in formal inquiries or requests for production of documents and records through section 179 inquiries, section 181 inquiries and section 182 directions);
- the number of investigations started (from 33 to 62 – an increase of 87.9%);
- the number of criminal charges laid (from 3 to 18 – an increase of 500%);
- the number of Notices of Proposed Disciplinary Action issued (from 4 to 10 – an increase of 150%); and
- the number of search warrants executed (from 2 to 20 – an increase of 900%).
The SFC also conducted 71 on-site inspections of licensed corporations to review their compliance with the applicable regulatory requirements. Among the 245 breaches identified during the on-site inspections, about 70% of the breaches are related to a breach of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission; non-compliance with anti-money laundering guidelines; or internal control weaknesses.