This content is from: Local Insights

Hong Kong

The Hong Kong Securities and Futures Ordinance (SFO) came into force on April 1 2003 and is aimed at maintaining and promoting fairness and efficiency in the securities and futures industry. The new SFO was enacted on March 13 2002 and replaced 10 Ordinances. About 40 codes and guidelines were issued under the Ordinance. Combating market misconduct and protecting investors is one of the key concerns of the SFO and a number of reforms have been introduced:

Establishing a market misconduct tribunal

The tribunal has been created to succeed the insider dealing tribunal. The new tribunal can deal with all types of market misconduct and is armed with a wider range of sanctions than those of the insider dealing tribunal.

Introducing new right of action for investors

A new statutory right of action has been created to enable investors who suffered financial loss as a result of any form of market misconduct to bring a civil action against the wrongdoers. Investors suffering loss as a result of relying on false or misleading statements made fraudulently or negligently will have a statutory right of action against those involved in issuing such statements.

Setting up an investor compensation fund

The fund must cover defaults by a wider range of intermediaries, and have a transparent limit of compensation per investor.

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