On 22 March 2013, a company and its director were acquitted by the Hong Kong's Magistrate's Court of four counts of issuing advertisements to promote a collective investment scheme, including posting relevant information on the company’s website, without the authorisation of the Securities and Futures Commission (SFC) in contravention of section 103 of the Securities and Futures Ordinance.
The defendants' case was that the relevant advertisements were directed to professional investors and as such did not require authorisation by the SFC under a statutory exemption. The Magistrate accepted the defendants’ argument and ruled also that the advertisements did not constitute invitations to the public to invest in the collective investment scheme. The SFC is considering an appeal of the decision.
This is a particularly interesting case as there is currently no guidance from the SFC on what is permissible marketing in relation to professional investors. It is hoped that this case will spur the SFC to work with the industry to agree standards of conduct with respect to advertising private funds to institutions and other professional investors.