SFC issues further reminder regarding paragraph 12.5 self-reporting obligation

The SFC has issued a circular to remind intermediaries to comply with the self-reporting obligation under paragraph 12.5 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. Licensed corporations and registered institutions should review their incident escalation and reporting mechanisms as soon as possible and consider whether any enhancements are required.

Paragraph 12.5 requires intermediaries to report to the SFC immediately upon the happening of (among other things) any material non-compliance with any law, rules, regulations and codes administered by the SFC or any such suspected non-compliance.

The SFC has recently observed that some intermediaries have not promptly reported to the SFC non-compliance with various legal or regulatory requirements, such as suspected unlicensed dealing activities, non-compliance with the suitability requirements and order recording requirements under the above code of conduct, and breaches of record keeping rules.

The SFC reminds intermediaries that:

  • registered institutions (although primarily regulated by the HKMA) are required to fulfil their reporting obligation by making the report directly to the SFC, in addition to reporting to the HKMA;
  • all material non-compliance referred to under paragraph 12.5 should be reported as soon as practicable upon identification, ie, not after the intermediary has completed its investigation, obtained legal advice or taken remedial action;
  • failure to comply with the reporting obligation may result in disciplinary action against intermediaries and their management.

The SFC also reminds intermediaries of:

William Hallatt
William Hallatt
Head of Financial Services Regulatory, Asia, Hong Kong
Email | Profile
+852 2101 4036
Hannah Cassidy
Hannah Cassidy
Partner, Hong Kong
Email | Profile
+852 2101 4133

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Filed under Announcements, Hong Kong, Regulatory Reform, Sector Updates by Herbert Smith Freehills

PRIVILEGE NO DEFENCE TO NOTICE REQUIRING PRODUCTION OF CLIENT’S PRIVILEGED DOCUMENTS TO REGULATOR

The High Court has held that an audit client could not withhold documents on grounds of privilege when responding to a notice requiring the production of documents in connection with an investigation into the auditor’s conduct: The Financial Reporting Council Ltd v Sports Direct International Plc [2018] EWHC 2284 (Ch).

The decision suggests that, where privileged documents are provided to a regulator for the purposes of an investigation into the conduct of a regulated person, and the privilege belongs to a client of the regulated person, there is no infringement of the client’s privilege. Accordingly, the fact that documents are subject to a client’s privilege will not justify a refusal to provide the documents to a regulator in response to a demand under its statutory powers, whether or not the statute can be taken to override legal professional privilege.

The decision also confirms (though it was not actually in doubt) that non-privileged documents do not become privileged merely by being attached to privileged lawyer/client communications for the purpose of giving or obtaining legal advice.

For our full briefing on the decision, please click here.

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Filed under Announcements, Regulatory Reform, Sector Updates by Herbert Smith Freehills, UK Regulations

Thailand’s new anti-corruption law targets foreign corporates

Thailand is the latest Asian jurisdiction to strengthen its anti-graft legislation. India, Japan, Singapore, Malaysia, Vietnam and China have all introduced anti-bribery legislation this year. The net effect is an uptick in the local enforcement risk for corporates operating in the region. Continue reading

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Filed under Announcements, Asia, Bribery and Corruption, Corporate Crime, Sector Updates by Herbert Smith Freehills, Thailand

SFC publishes AML/CFT inspection findings and urges intermediaries to ensure compliance

The Securities and Futures Commission (SFC) issued a circular on 31 August 2018 highlighting both deficiencies and good practices observed in relation to anti-money laundering and counter financing of terrorism (AML/CFT) compliance by licensed corporations (LCs) and associated entities (AEs). The observations were made over the past year from the SFC’s review of AML/CFT measures, policies, procedures and controls (AML/CFT systems) belonging to 13 LCs during thematic inspections and around 270 LCs during routine inspections. This follows on from the SFC’s circular issued on 26 January 2017, setting out its observations relating to AML/CFT compliance from inspections conducted in 2016 (see our earlier bulletin here).  Continue reading

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Filed under Announcements, Bribery and Corruption, Corporate Crime, Hong Kong, Sanctions and Money Laundering, Sector Updates by Herbert Smith Freehills

Stock Connect Northbound Investor ID Model set to launch on 17 September 2018

Late last month, the Securities and Futures Commission (SFC) announced that agreement had been reached with the China Securities Regulatory Commission (CSRC) to implement the investor identification model for Stock Connect Northbound trading (NB Investor ID Model) on 17 September 2018. This will apply to Northbound trading under both the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect.  Continue reading

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Filed under Announcements, Asia, Banking, China, Hong Kong, Regulatory Reform, Sector Updates by Herbert Smith Freehills

Herbert Smith Freehills edits and contributes chapters to Getting the Deal Through – Financial Services Litigation 2018

There has been a significant rate of global growth of litigation in the financial services sector following the 2008 global financial crisis. While the existence of financial services litigation is truly a global phenomenon, it has become apparent that the law and procedures in relation to such disputes have evolved in different ways across the jurisdictions.

The recently published third edition of Getting the Deal Through – Financial Service Litigation, edited by Damien Byrne Hill and Ceri Morgan, compiles chapters dedicated to financial services litigation from jurisdictions across the globe, including those contributed by a number of our offices.

The text charts the growth of litigation in the financial sector worldwide, with expert authors answering key questions in major jurisdictions. Topics include: common causes of action; powers of regulatory authorities; alternative dispute resolution; specialist courts and procedures; disclosure requirements; data governance issues; remedies and enforcement; and changes in the regulatory landscape since the financial crisis.

Please find attached a copy of the publication, also available on the Getting the Deal Through website.

Contributing offices

AustraliaAndrew Eastwood, Tania Gray and Simone Fletcher

FranceClément Dupoirier and Antoine Juaristi

GermanyMatthias Wittinghofer and Tilmann Hertel

Hong KongGareth Thomas, William Hallatt, Hannah Cassidy, Dominic GeiserJojo Fan and Valerie Tao

IndonesiaAlastair Henderson and Emmanuel Chua

South AfricaPeter Leon and Jonathan Ripley-Evans

United Arab EmiratesStuart Paterson, Natasha Mir and Sanam Khan

United KingdomDamien Byrne Hill, Karen Anderson, Ceri Morgan, Ajay Malhotra, Sarah Thomas and Ian Thomas

United StatesScott Balber, Jonathan Cross and Michael R Kelly

Accreditation: Reproduced with permission from Law Business Research Ltd. Getting the Deal Through – Financial Services Litigation 2018 was first published in August 2018. For further information please visit www.gettingthedealthrough.com.

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Filed under Africa, Announcements, Banking, European Regulation, France, Germany, Hong Kong, Indonesia, Sector Updates by Herbert Smith Freehills, UK Legislation, US

COURT OF APPEAL DECISION IN ENRC: ORTHODOXY RESTORED ON LITIGATION PRIVILEGE, BUT NARROW INTERPRETATION OF “CLIENT” REMAINS FOR NOW

The Court of Appeal has today handed down its eagerly awaited decision in the ENRC appeal: The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2018] EWCA Civ 2006. At first instance, the High Court took a restrictive approach to both litigation privilege and legal advice privilege (see our summary of the decision here). The Court of Appeal has allowed the appeal on the question of litigation privilege but has, with apparent reluctance, dismissed the appeal on legal advice privilege, concluding it is a matter for the Supreme Court. Continue reading

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Filed under Announcements, Commercial Litigation, Corporate Crime, Investigations, Sector Updates by Herbert Smith Freehills, UK, UK Legislation

HKMA endorses benefits of cooperation

The Hong Kong Monetary Authority (HKMA) has recently released its first Guidance Note on Cooperation with the HKMA in Investigations and Enforcement Proceedings.

In releasing the guidance note, the HKMA has expressly signalled its desire to encourage and facilitate cooperation, noting that its benefits include time, cost and resource savings to both the HKMA and institution or individual concerned.  Continue reading

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Filed under Announcements, Bribery and Corruption, Corporate Crime, Hong Kong, Sector Updates by Herbert Smith Freehills

Corporate Crime summer update 2018

Welcome to the summer 2018 edition of our corporate crime update – our round up of developments in relation to corruption, money laundering, fraud, sanctions and related matters over July and August.  Continue reading

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Filed under Announcements, Australia, Bribery and Corruption, Corporate Crime, EU, Hong Kong, India, Investigations, Korea, Middle East, Regulatory Reform, Sanctions and Money Laundering, Sector Updates by Herbert Smith Freehills, Singapore, Thailand, US, Vietnam

The Rise of the Crypto Hedge Fund: Opportunities and Challenges

The extraordinary returns generated by cryptocurrencies have led to a frenzy of investment activity and interest from investors. Several new crypto hedge funds have emerged, and cryptocurrency is fast establishing itself as a mainstream asset class.

However, numerous operational and regulatory concerns remain. While regulators are increasing oversight, established players and startups are moving to address the current gaps in infrastructure, control and compliance.

Read our latest article for Regulation Asia to learn more about overcoming the challenges to make the most of the opportunities of this new asset class.

 

William Hallatt
William Hallatt
Head of Financial Services Regulatory, Asia, Hong Kong
Email | Profile
+852 2101 4036
Hannah Cassidy
Hannah Cassidy
Partner, Hong Kong
Email | Profile
+852 2101 4133
Grace Chong
Grace Chong
Senior associate, Hong Kong
Email | Profile
+852 2101 4138
Natalie Curtis
Natalie Curtis
Of Counsel, Singapore
Email | Profile
+65 6868 9805
Jeremy Birch
Jeremy Birch
Senior Associate, Hong Kong
Email | Profile
+852 2101 4195

 

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Filed under Announcements, Hong Kong, Regulatory Reform, Sector Updates by Herbert Smith Freehills