1. Introduction
This policy statement provides an overview of the SFC's approach to disclosing publicly the fact that it is conducting an inquiry or investigation into a corporation and highlights some of the key concerns and considerations that will usually affect the SFC's decision whether or not to make any such disclosure.
2. General position
2.1 The SFC will not normally make public the fact that it is or is not conducting a statutory inquiry or investigation, or any of its findings or conclusions, save in exceptional circumstances or where required to do so by law.
2.2 It is not possible to set out an exhaustive list of the exceptional circumstances but paragraph 3 gives some indication of when they are likely to arise. In any event, each case will turn on its particular facts.
3. Publicity during an inquiry or investigation
3.1 Where the SFC is conducting an inquiry or investigation into a corporation, it will, in exceptional circumstances, make a public announcement that it is doing so if it considers such an announcement is desirable to:
-
maintain and promote confidence in the securities and futures industry;
-
protect members of the investing public;
-
minimise widespread misconduct or reduce systemic risks in the securities and futures industry; or
-
facilitate the conduct of the inquiry or investigation, for example by bringing forward witnesses.
3.2 In deciding whether or not to make an announcement, the SFC will have due regard to its functions as stated in the Securities and Futures Ordinance (Cap. 571)(SFO). It will also consider:
-
the potential prejudice that it believes may be caused to the inquiry or investigation itself or to any person who is the subject of it; and
-
the restrictions on disclosure imposed by section 378 of the SFO (which deals with the preservation of secrecy).
3.3 The exceptional circumstances referred to in paragraph 3.1 may arise, for example, in the following cases:
-
where the matters under inquiry or investigation have become the subject of public concern, speculation or rumour. In such cases it may be desirable for the SFC to make public the fact of its inquiry or investigation in order to allay concern, or contain the speculation or rumour and thereby maintain public confidence.
-
where publicity is unavoidable. For example, investigations into suspected criminal offences may lead to the SFC having to make enquiries amongst the general public and thus attract publicity.
3.4 A decision to make an announcement must be made by at least two Executive Directors in consultation with the Chief Executive Officer. Announcements will normally be limited to confirming the fact that an inquiry or investigation is under way in respect of a corporation and specifying the provision of the SFO under which the SFC is proceeding.
4. Publicity following an inquiry or investigation
4.1 The SFC may announce the conclusion of an inquiry or investigation where:
-
it is not prevented by law from doing so;
-
the fact that the SFC was conducting an inquiry or investigation was previously made public, whether by the SFC or otherwise; and
-
the SFC has concluded that there is no or insufficient evidence to justify taking any further regulatory action.
4.2 The SFC will normally make a public announcement if, upon the conclusion of an inquiry or investigation, enforcement action is taken against a person. Paragraphs 4.3 to 4.8 clarify when such announcements will normally be made and the information that they will usually contain. However, this is not an exhaustive list and the timing of any announcement and the information that it may contain will be decided on a case-by-case basis.
4.3 Where the SFC has commenced any criminal proceedings, it may make a public announcement that it has done so. When the Court has adjudicated the matter, the SFC will normally make a public announcement that will include the identity of the defendant, a brief summary of the facts of the case and the decision of the Court.
4.4 Where the SFC has taken disciplinary action under Part IX of the SFO against any person, it will normally make a public announcement setting out the identity of the person disciplined, a brief summary of the conduct that attracted the disciplinary action and details of the sanction imposed. However, announcements regarding disciplinary action will not be made until after the expiry of the period for lodging an appeal to the Securities and Futures Appeals Tribunal or, if an appeal is lodged, until after the appeal has been determined.
4.5 Where the SFC has issued, withdrawn, substituted or varied a restriction notice under Part X of the SFO, it will normally make a public announcement setting out the identity of the person, the subject of the notice as well as the action taken under the notice and the reasons for doing so.
4.6 Where the SFC has commenced any civil proceedings or made any application to the Court pursuant to its powers of intervention under Part X of the SFO, it may make a public announcement that it has done so. When the Court has adjudicated the matter, the SFC will normally issue a public announcement noting the decision. Such an announcement will normally include the identity of the person against whom proceedings have been initiated, a brief summary of the facts of the case and the decision of the Court.
4.7 Irrespective of the outcome of a ruling, and subject to confidentiality considerations of a commercial nature, it is the policy of the Takeovers and Mergers Panel and the Takeovers Appeal Committee to publish their rulings, and the reasons for those rulings, so that their activities may be understood by the public.
4.8 Where, on the conclusion of its inquiry or investigation, the SFC is required to submit a report to the Financial Secretary, or where it has uncovered evidence of serious crime and has passed this on to the Commercial Crime Bureau or the Independent Commission Against Corruption, the SFC will not normally make a public announcement. However, it may do so in exceptional circumstances if:
-
such an announcement is desirable for any of the purposes described in paragraph 3.1;
-
the recipient agency has no objection; and
-
the fact of the SFC's inquiry or investigation was previously made public (whether by the SFC or otherwise).
In deciding whether to make an announcement, the SFC will have due regard to and consider the matters described in paragraph 3.2. Any such announcement will normally be limited to confirming only that the SFC has concluded its inquiry or investigation and passed its findings to the relevant agency for consideration.
Last update: 2 Oct 2019