SFC issues circular regarding suspected ramp and dump scams involving market manipulation in shares of listed companies
The SFC has issued a circular in light of the recent increase in the number of suspected ramp and dump scams, often conducted using popular social media platforms, which now account for a significant percentage of the SFC's market manipulation investigations.
The SFC conducts daily surveillance on securities and futures trading and requests information from intermediaries in relation to possible market manipulation or insider dealing (which may be in the form of preliminary inquiries by phone or email followed by formal requests). Intermediaries should respond to the SFC's inquiries and provide assistance as quickly as possible. Intermediaries have an obligation under paragraph 12.5(f) of the SFC's main code of conduct to report market misconduct reasonably suspected to have been committed by their clients to the SFC in a timely manner. The circular also contains a non-exhaustive illustrative list of red flags which may (individually or collectively) indicate a potential ramp and dump scam. [29 Jun 2021]
HKMA publishes seventeenth issue of Complaints Watch
The Hong Kong Monetary Authority (HKMA) has published the seventeenth issue of its Complaints Watch. The Complaints Watch is a periodic newsletter highlighting the latest complaint trends, emerging topical issues and good practices that authorised institutions may find helpful. The latest issue provides guidance on enhancing consumer protection against phishing scams and protecting safety of customer transactions. [23 Jun 2021].
FSDC issues research report on cybersecurity strategy for Hong Kong financial services industry
The Financial Services Development Council (FSDC) has released a research report entitled "Cybersecurity Strategy for Hong Kong’s Financial Services Industry” (see full report and highlights). The report details how cyber-attacks are affecting the financial industry, assesses the industry’s cyber resilience, and outlines ways to enhance the industry’s cyberspace safety framework. [10 Jun 2021]
Sanctions and anti-terrorism updates
The SFC has issued a circular regarding the United Nations Sanctions (Yemen) Regulation 2019 (Amendment) Regulation 2021, which implements sanctions against Yemen as imposed or renewed by the United Nations Security Council under Resolution 2564, including prohibition against (i) making available to certain persons or entities any funds or other financial assets or economic resources, or (ii) dealing with funds or other financial assets or economic resources of certain persons or entities.
SFC increases efforts to combat IPO-related misconduct and outlines approach in joint statement with SEHK
The Securities and Futures Commission (SFC) is stepping up its efforts to tackle misconduct and improper behaviour related to new listings. In a joint statement with the Stock Exchange of Hong Kong Limited (SEHK), it has highlighted some issues of concern in recent initial public offerings (IPOs).
The observations and regulatory concerns highlighted in the statement relate to (i) the increasing number of suspected "ramp-and-dump" schemes associated with IPOs in recent years; (ii) the lack of a robust and transparent share placement and price discovery process; and (iii) unusually high underwriting commissions and suspicious arrangements. [20 May 2021]
MMT sanctions listed company and its directors for late disclosure of inside information
The Market Misconduct Tribunal (MMT) has sanctioned China Medical & Healthcare Group, formerly known as COL Capital Limited (COL), and six of its former and current directors for late disclosure of inside information. The six individuals admitted that their negligent conduct had resulted in COL breaching the requirements of the corporate disclosure regime.
In addition to ordering fines, the MMT has (i) disqualified two of the individuals from being directors of a listed company for six and eight months respectively; (ii) ordered COL and the six individuals to pay the SFC's investigation and legal costs, and the costs of the MMT proceedings; and (iii) ordered the six individuals to attend an SFC-approved training programme on the corporate disclosure regime, directors' duties and corporate governance. [12 May 2021]
Former bank employee imprisoned for bribery over customer data for business touting
The Eastern Magistrates' Courts has sentenced a former bank employee to three weeks in jail following the latter's guilty plea to a bribery charge regarding a customer's confidential information from another bank for business touting. [7 May 2021]
China top government body issues statement on tackling illegal activities in securities market
In a joint statement by the General Office of the Communist Party of China Central Committee and the General Office of the State Council, China has vowed to crack down on illegal activities in the securities market and promote the high-quality development of the capital market. In particular, efforts will be made to improve laws and regulations on data security and strengthen criminal punishment against fraudulent listing, false representations, market manipulation, and inside trading. [6 Jul 2021]
Former official of China's biggest policy bank accused of corruption
A former senior project appraisal official of the China Development Bank was expelled from the Communist Party on corruption allegations in a series of investigations related to China's biggest policy lender. The former official was found to have taken an "especially huge amount" of bribes and offered favours to others. He is also accused of illegally leaking confidential information, engaging in suspicious activities and violating party discipline. [23 Jun 2021]
Former anti-corruption investigator faces graft charges
A former senior inspector at the Communist Party's Central Commission for Discipline Inspection, Dong Hong, will be tried for accepting an "extremely large amount" of bribes. [11 Jun 2021]
Over 1,100 arrested in China's crackdown on crypto-related money laundering
The Ministry of Public Security has announced that police have arrested over 1,100 people suspected of using cryptocurrencies to launder illegal proceeds from telephone and internet scams in a recent crackdown. The persons involved charged their clients a commission of 1.5% to 5% to convert illegal proceeds into virtual currencies via crypto exchanges, according to the ministry. [10 Jun 2021]
China's central bank publishes proposed amendments to the Anti-Money Laundering Law for public consultation
In order to build a risk-based AML regulatory environment, the People's Bank of China has published draft amendments to the anti-money laundering regime, which include, among others: (i) expanding the monitoring scope of AML; (ii) empowering local authorities to conduct AML investigations; (iii) reforming investigation processes; (iv) increasing the deterrence effect of AML penalties; and (v) providing/updating definitions of terms such as "anti-money laundering" and "beneficial owner". [1 Jun 2021]