Hong Kong's SFC Publishes Annual Report

by Mary Swire, for LawAndTax-News.com, Hong Kong

19 May 2006

In its recently published annual report, Hong Kong's Securities and Futures Commission revealed that it had recorded a surplus of $355 million for the financial year ending March 31.

In 2005-2006, according to the report, the Commission's total revenue amounted to $852 million, with total expenditure of $497 million. Reserves of $1.2 billion were recorded at the year-end.

The annual report covering the 2005-06 period was tabled at the Legislative Council on Wednesday.

In it, Commission chairman Martin Wheatley stated that with the support of the Government, market bodies, market practitioners and the public, the commission can confidently meet the regulatory challenges in the next few years.

Outlining the SFC's major achievements in 2005-06, Mr Wheatley explained that:

"The SFC’s role may be expressed in four disciplines: Regulate, Enforce, Facilitate and Educate."

He went on to reveal that in the last year, the Commission has mapped out measures to strengthen the derivative warrants market, reviewed the disclosure of interests requirements, and secured public support for securities margin financing reform.

It also proposed tighter regulation of sponsors, and continued work on statutory backing for important listing requirements.

On the enforcement front, the commission concluded 84 disciplinary inquiries and took action against 98 companies and people. It also disciplined a sponsor for due-diligence failure.

A securities analyst was banned from the industry for five years for conflicts of interest and the commission prosecuted 72 companies and people.

Also during the year, the commission identified 18 cases of suspect warrants-market activities for investigation, investigated 27 cases involving listed companies, and referred 24 cases to the Police.

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