The major enforcement trends and themes reflected in the SFC’s Q4 2021 Quarterly Report are summarised in the tables and sections below (the full report can be found at sfc.hk (PDF download), and our previous article on the SFC’s Q2 2021 Quarterly Report can be found at reedsmith.com):
Highlights of the recent enforcement actions
The above case highlights show that:
- Sponsor failures, AML breaches and internal control failures remain high priority areas where the SFC will continue to investigate and impose disciplinary action as appropriate. With respect to sponsor failures, it is noteworthy that the SFC is still committed to initiating disciplinary action and imposing sanctions despite the fact that the listing applications in question had lapsed and no harm was caused to members of the investing public. Through this, the SFC intends to send a strong signal to the public that it will not tolerate any substandard due diligence work of sponsors which could facilitate the listing of companies that are not suitable for listing.
- In addition to taking disciplinary action against the licensed intermediary, the SFC continues to emphasise the accountability of senior management by taking active steps to impose sanctions on responsible officers and senior managers who have oversight of the relevant lines of business.
- Where bans from the industry are imposed on licensed individuals, the duration of the ban will depend on the type of misconduct, among other things. Where an element of dishonesty is involved, the duration of the ban will typically be a lot longer, if not indefinite.