Under section 204 and section 205 of the Securities and Futures Ordinance (SFO), the Securities and Futures Commission (SFC) has the authority to prohibit securities brokers, without SFC’s prior written consent from disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with, certain assets in any way in the client accounts, including:
(i) entering into transactions for any securities; and/or
(ii) processing any withdrawals or transfers of securities and/or cash or any transfers of money arising from the disposal of securities; and/or
(iii) disposing of or dealing with any securities or cash on the instructions of any authorized person of the client accounts or by any person acting on their behalf; and/or
(iv) assisting another person to dispose of or deal with any relevant property in the client accounts in any manner. The brokers are also required to notify the SFC if they receive any of these instructions.
On 15 February 2019, the Securities and Futures Commission (SFC) has issued restriction notices to the following 3 brokers to freeze client accounts related to suspected market misconduct.
1) Changjiang Securities Brokerage (HK) Limited is a corporation licensed under the SFO to carry on Type 1, 2, 4 and 5 regulated activities
2) Haitong International Securities Company Limited is a corporation licensed under the SFO to carry on Type 1, 3 and 4 regulated activities
3) Kingston Securities Limited is a corporation licensed under the SFO to carry on Type 1 regulated activity.
The restriction notices are to prohibit them from dealing with or processing certain assets held in various client accounts which are related to the suspected disclosure of false or misleading financial information in various announcements, annual results and annual reports of a listed company, which was likely to induce transactions.
SFC’s investigation into the suspected market misconduct did not focus on the brokers. The restriction notices do not affect their operations or their other clients. SFC’s investigation is continuing.
For legal advice or services on SFC investigation and enforcement, please contact CHOW & CHEUNG, Hong Kong solicitors & notaries [email@example.com]
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