Reed Smith In-depth

On 24 February 2022, Hong Kong’s Securities and Futures Commission (SFC) issued its Q4 2021 Quarterly Report, covering key regulatory developments and providing insight into the latest enforcement trends and regulatory enhancements during the period between October and December 2021.

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 (PDF download), and our previous article on the SFC’s Q2 2021 Quarterly Report can be found at

Highlights of the recent enforcement actions

Client Alert 2022-066 table 

The above case highlights show that:

  1. 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.
  2. 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.
  3. 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.