Securities and Futures Commission (SFC)
On 4 November 2024, Julia Leung, CEO of the SFC, delivered the opening remarks at the AML/CFT Regtech Forum, emphasising the transformative role of regulatory technology (Regtech) in combating financial crime.
Key Highlights:
- Significant Regtech Adoption:
- Over 80% of firms reported improved AML effectiveness due to Regtech adoption.
- Key tools include name screening (92% adoption), customer due diligence (70%), and transaction monitoring.
- Challenges with Traditional AML Approaches:
- Outdated systems generate high volumes of false positives, creating inefficiencies and escalating compliance costs.
- Benefits of Advanced Regtech Solutions:
- Automation and AI-driven tools streamline processes, reduce manual workloads, and focus efforts on genuine risks.
- Call to Action:
- Leung urged financial institutions to embrace Regtech to bolster market integrity, enhance compliance, and keep pace with sophisticated financial crime tactics.
This speech reflects the SFC’s push for innovation and highlights the need for financial institutions to adopt robust technological solutions to meet evolving regulatory demands.
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On 6 November 2024, the SFC announced a 15-year industry ban against Mr. Jonathan Dominic Iu Wai Ching, a former responsible officer of Tarascon Capital Management (Hong Kong) Limited.
Key Points:
- Misconduct: The Market Misconduct Tribunal (MMT) determined that Mr. Iu engaged in insider trading by dealing in shares of China Gas Holdings Limited while in possession of confidential information about a proposed takeover.
- Penalty: The SFC imposed a 15-year prohibition on Mr. Iu from re-entering the industry, reflecting the severity of his actions and their impact on market integrity.
This case serves as a critical reminder of the importance of adhering to ethical standards and regulatory requirements in all financial activities.
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On 8 November 2024, the Eastern Magistrates’ Courts transferred a high-profile ramp-and-dump case involving Ms. Chan Sin Ying, a surrendered fugitive, to the District Court.
Key Highlights:
- Allegations:
- Chan, extradited from Singapore on October 3, 2024, is charged with conspiracy to execute a fraudulent scheme involving the shares of Wan Cheng Metal Packaging Company Limited.
- She is accused of collaborating with Stevens Yip Chi Fai, Lau Ka Wing, and So Lung Ying in a sophisticated ramp-and-dump operation.
- Legal Proceedings:
- Initially denied bail, Chan was later granted strict bail conditions, including HK$400,000 cash bail, HK$300,000 sureties, surrendering travel documents, and regular police reporting.
- Next Steps:
- Her case will be consolidated with her co-conspirators during the first District Court hearing on November 28, 2024.
This case underscores the SFC’s commitment to tackling cross-border securities fraud and ensuring market integrity.
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On 12 November 2024, the SFC initiated proceedings in the MMT against 31 individuals, including Mr. Sui Guangyi, former chairman and non-executive director of Ding Yi Feng Holdings Group International Limited, over allegations of manipulating shares of Smartac International Holdings Limited.
Key Allegations:
- Manipulative Trading:
- Between 31 October 2018 and 11 March 2019, Sui and others allegedly conducted matched trades to artificially inflate the price and turnover of Smartac shares, creating a false impression of active trading.
- These matched trades constituted a significant portion of the trading volume during the period.
- Impact on Ding Yi Feng:
- The inflated share price of Smartac significantly benefited Ding Yi Feng, as Smartac shares accounted for 21.68% of its gross assets as of 31 December 2018.
Regulatory Action:
- The SFC issued restriction notices to freeze securities accounts linked to the alleged manipulation, which remain in effect.
- The case highlights collaboration with the China Securities Regulatory Commission during the investigation.
This case underscores the SFC’s commitment to addressing cross-border market misconduct and ensuring market integrity.
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On 12 November 2024, the District Court held a hearing for 19 defendants involved in three large-scale ramp-and-dump cases concerning securities-related fraud and money laundering. These cases followed joint investigations by the SFC and the Hong Kong Police.
Key Details:
- Listed Companies Involved:
- Eggriculture Foods Limited
- Fullwealth Construction Holdings Company Limited
- KNT Holdings Limited
- Hearing Updates:
- No pleas were taken, and the cases have been adjourned to 25 March 2025.
- The District Court had previously consolidated the KNT Holdings Limited case with another matter involving a suspected syndicate member.
- Bail Conditions:
- Cash and sureties between HK$50,000 and HK$1 million.
- Defendants must surrender travel documents, remain in Hong Kong, report regularly to the police, and inform the police of any changes to their residential address.
This case underscores the SFC’s ongoing collaboration with law enforcement to combat market manipulation and financial crime.
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Hong Kong Insurance Authority (IA)
On 6 November 2024, the IA issued a warning to the public about “Marble Insurance Services Limited,” an unauthorised entity falsely claiming to operate as a general insurer in Hong Kong.
Key Points:
- Unauthorised Operations:
- The company is neither an authorised insurer nor a licensed insurance intermediary under the Insurance Ordinance (Cap. 41).
- It has unlawfully used an insurance-related name without the IA’s written consent.
- Public Advisory:
- Individuals who have shared personal information or conducted financial transactions with this entity are urged to report the matter to the Hong Kong Police Force.
- The public is reminded to verify the legitimacy of companies conducting insurance business using the IA’s online registers of authorized insurers and licensed insurance intermediaries.
- Legal Implications:
- Using “insurance” in a business name without IA approval is an offence under Section 120 of the Insurance Ordinance, punishable by a fine of HK$200,000 and up to two years of imprisonment for individuals.
This warning reinforces the importance of due diligence when engaging with insurance-related entities to avoid potential fraud or financial loss.
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