On 12 December 2017, the Securities and Futures Commission (SFC) issued a Guidance Note on Co-operation (the “Note”) highlighting the benefits of co-operating in its investigation and enforcement proceedings. The SFC also issued frequently asked questions to help the industry and public to understand the Note which replaces the Hong Kong financial regulator’s previous guidance published in March 2006.
In the aftermath of the global financial crisis, the SFC put aside the 2006 guidance and adopted what some critics considered to be an inflexible approach towards the resolution of SFC enforcement actions generally. When settlements were agreed, it was often unclear from the SFC’s public announcements what credit, if any, was given for co-operation in the enforcement process.
The Note is designed to encourage early co-operation by articulating what may be the benefits of co-operation and when may be the most opportune times to engage the SFC in settlement discussions. Under appropriate circumstances, the SFC says co-operation may be recognised in the form of reduced sanctions. Hopefully, this signals a more transparent approach by the regulator to co-operation and settlement.