Hong Kong’s Regulator Outlines Rules For Settling Violations, In A Move To Enhance Its Efficiency
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Hong Kong’s securities regulator has signalled to the market its willingness to settle regulatory breaches that fall into the “not-so-serious” category, emulating similar policies by the UK’s Financial Conduct Authority to find a speedier and more efficient way to optimise its enforcements of financial rules.
The SFC would fine or penalise companies and individuals that breach the city’s securities regulations, but won’t pursue criminal prosecutions in cases that can be settled without resorting to legal recourse, according to guidance notes published in December about the reasons and purpose of opting for settlement.
“For cooperation to be recognised, parties must go above and beyond their statutory and regulatory obligations,” the SFC’s executive director for enforcement Thomas Atkinson said last month. “Those who take proactive steps to resolve our regulatory concerns in a timely manner will benefit the most from cooperation, which could result in significant savings of time and resources.”
The new guidelines widened the scope of potential settlement to include failure to disclose relevant information, short-selling, and other “mild” forms of market misdemeanours. The new guidance also stipulate that any settlement with the regulator that involved a monetary fine would have to be disclosed publicly.
The option for settlement comes as the regulator seeks to improve its efficiency, while market transactions augmented by technology and broadened by multiple jurisdictions throw up fresh regulatory challenges. The SFC and the Hong Kong stock exchange last month pushed through the biggest overhaul of the city’s listing regulations in three decades to attract new-economy and technology companies to raise capital.
The SFC last year began working with the city’s Independent Commission Against Corruption (ICAC) on joint enforcement to crack down on fraud and financial misdemeanours involving some of the city’s listed companies. The regulator is also stepping up its cross-border enforcements with the China Securities Regulatory Commission (CSRC).
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Author: Enoch Yiu
Source: SCMP
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