HONG KONG (Reuters) - A review panel has urged Hong Kong’s markets watchdog to speed up actions to enforce compliance with securities rules by banks and other firms, noting that the longer an investigation took, the less powerful the deterrent effect.
The Securities and Futures Commission (SFC) last year levied some its largest fines ever. These included a combined $100 million fine for four banks, including UBS (UBSG.S) and Morgan Stanley (MS.N) for due diligence failings on a series of IPOs, two of which took place in 2009, and a separate $51 million fine for UBS for overcharging clients between 2008 and 2017.
Lawrence Lee, chairman of the Process Review Panel (PRP) for the SFC — an independent panel tasked with reviewing the regulator’s operations — said that “in a number of enforcement cases reviewed this year, PRP noted how the investigation process ... could have been expedited and refined”.
The comments were part of the PRP’s annual report, which also warned it was concerned that the SFC did not inform the subjects of its investigations as quickly as it could.
In order to speed up enforcement cases the PRP urged the regulator to improve internal handover procedures, expand its pool of external market experts, make greater use of information technology, and seek legal advice more efficiently.
In one case it found that the SFC’s enforcement division had taken a year to seek advice from the organization’s legal division.
The report included responses from the SFC. One said that “all its investigations were managed with a strong sense of urgency” and that many were complex, wide-ranging and subject to secrecy provisions.
Reporting by Alun John; Editing by Catherine Evans