SFC sets investigative focus on corporate fraud crackdown

The Securities and Futures Commission has shifted its investigative focus towards fraud and misconduct at the corporate level, according to executive director of enforcement Tom Atkinson, who said such malpractice had cost the Hong Kong stock market HK$200 billion.

Atkinson, who became head of the SFC’s investigations unit in May, revealed that he has restructured his team to focus more on cracking down on corporate crime in a speech to 900 regional regulators, fund mangers and brokers on Wednesday at the Thomson Reuters 7th Pan Asian Regulatory Summit in Hong Kong.

“At the top of our priorities are listed company-related issues. We are particularly concerned about risks posed by corporate fraud and misfeasance, market manipulation and intermediary misconduct,” he said.

“Key cases of this nature have wiped out more than HK$200 billion in market capitalisation from the Hong Kong stock market, and all of them involved some form of corporate fraud or misfeasance.

“These cases not only caused immense losses to investors, they also severely damaged the integrity and reputation of the Hong Kong markets.”

Atkinson said the regulator has set up four new permanent investigative teams including one looking into cases of corporate fraud, and a corporate misfeasance team probing the misuse of powers by senior management at listed companies. Such cases can lead to investors losing billions of dollars.

“They often relate to companies with business operations in mainland China and most of the evidence and witnesses are in the mainland,” he said.

Since the SFC does not have jurisdiction in the mainland, it will needs the help of Chinese regulators in such cases, he added.