Hong Kong Watchdog Readies Charges Against Widespread Fraud

(Bloomberg) -- Hong Kong’s Securities and Futures Commission said it is preparing to charge 60 companies and individuals as investigations into what enforcement chief Tom Atkinson called “nefarious networks” come to a head. He spoke at the Refinitiv Pan Asian Regulatory Summit in Hong Kong on Wednesday.

Key Insights

  • The action would help ease longstanding concern that small-cap firms are causing losses for investors and denting Hong Kong’s reputation as a global financial hub.
  • The SFC is keen to bolster its reputation as a tough regulator and highlighted that its raids over the past year have covered about 200 entities and residential premises.
  • Atkinson’s comment that complex networks of listed companies, brokers, money lenders and financial advisers had enriched themselves at the expense of ordinary shareholders shows the deep-rooted challenge facing overseers.

Digging Deeper

  • The SFC revamped operations two years ago to better target stock manipulation, shareholder vote-rigging and defrauding of minority investors.
  • Hong Kong regulators have over the past year been tightening rules on backdoor listings, rights issues and other actions seen as tools for market misconduct.
  • Atkinson on Wednesday didn’t disclose deadlines for filing the charges but said “life is about to get very uncomfortable for those who abuse our capital markets.”

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