Hong Kong SFC Fines Fund Managers for Internal Control Failures and Other Breaches

April 29, 2024
Key Takeaways: The Hong Kong Securities and Futures Commission recently took disciplinary action against two fund managers for failures and breaches relating to fund management activities. Noncompliance by the fund managers included internal control and risk management inadequacies, which resulted in failure to identify, prevent, manage and/or monitor conflicts of interest and failure to comply with investment strategy, objectives and restrictions, among other things. Intermediaries’ misconduct and, in particular, internal control failures, very much remain an enforcement priority of the regulator. Licensed intermediaries, especially holders of type 9 (asset management) licenses, should therefore ensure that effective internal controls and risk management procedures are not just in place but also properly implemented, monitored and adhered to. Directors and senior management of asset managers should adopt a proactive and inquisitive approach in identifying and addressing actual or potential noncompliance. In the past three months, the SFC has pursued disciplinary proceedings against two fund managers for failures and breaches relating to fund management activities. Licensed intermediaries, and especially holders of type 9 (asset management) licenses and their senior management, should ensure that effective internal controls are in place to properly manage the risks arising from fund management activities. PICC Asset Management (Hong Kong) Company Limited. On 5 February 2024, the Securities and Futures Commission (“SFC”) reprimanded and fined PICC Asset Management (Hong Kong) Company Limited (“PICC”) HK$2.8 million over its failure to discharge its duties as the manager of a Cayman-incorporated fund. The SFC found that PICC failed to properly manage the fund in accordance with its investment strategy, objectives and investment restrictions. Contrary to the fund’s stated objective of capital preservation...

Hong Kong Financial Regulatory Review 2023

April 29, 2024
Key Takeaways: As Hong Kong gradually emerged from the effects of Covid-19 over the past year, the financial regulators, in particular the Securities and Futures Commission (the “SFC”), have also become increasingly active. In recent months, there has been an uptick in the number of investigations initiated by the SFC. Insider dealing, internal control failures and corporate misconduct remain high on the SFC’s list of enforcement priorities, whilst it continued to step up its efforts to crack down on ramp-and-dump syndicates. To this end, the SFC has worked closely with other regulators in Hong Kong, Mainland China and overseas to conduct joint operations, training and other activities, and is expected to continue doing so going forward. All in all, although enforcement by the SFC still has some way to go before it reaches pre-Covid levels, the trend is certainly an upward one. Significant regulatory developments were also seen in the emerging areas of ESG and virtual assets, and initiatives to reform or refine long standing regulations and practices relating to insider dealing and market soundings were introduced. Further, a recent Court of Appeal decision on letters of no consent also has significant implications from an enforcement perspective. In this review, we delve into some of these key financial regulatory developments in 2023 and highlight potential implications that are vital to managing risks and meeting regulatory expectations. As Hong Kong emerged from the Covid-19 slumber over the past year, the financial regulators, in particular the Securities and Futures Commission (the “SFC”), have also become increasingly active. In 2023, the SFC initiated and concluded more than 10 consultations; conducted several high-profile...

In-House Insights with Kenneth Wong of LINK REIT

April 25, 2024
We recently asked Kenneth Wong, Chief Legal Officer and Company Secretary at LINK REIT, to share more about his remarkable professional journey. As a co-winner of the IHC Counsel of the Year in 2023, Kenneth highlights his approach to becoming a successful in-house counsel in this Q&A… Tell us a bit about your legal journey that has led you to your role as chief legal officer and company secretary at LINK. I took my law degree in the UK and was trained as a solicitor in Hong Kong. I co-founded a corporate and commercial law firm in Hong Kong when I had only seven years of PQE and acted as its Managing Partner for fifteen years until my retirement from the partnership in 2016. During that period, the firm grew from three fee earners to fifty fee earners and eventually merged with an international law firm. After resting for a while to take a Masters Degree, I joined a Chinese conglomerate (HNA Group) as its International General Counsel to set up a strong team of transactional lawyers at its International Headquarters in Hong Kong to make acquisitions around the world. During the three years at HNA, my team completed more than HK$300 Billion of acquisitions and related financing. Hence, HNA became a Fortune Global Top 100 company. I also set up a Virtual Global Legal Centre to link up all the general counsels of the newly acquired companies around the world. The Virtual Global Legal Centre oversaw more than 300 in-house lawyers in the larger HNA Group. In 2019, I took up my current role at the largest REIT...

K3 Legal, With Fred Kan & Co, Opens First Office in Hong Kong

April 19, 2024
  Leading Auckland, New Zealand law firm K3 Legal has received approval from The Law Society of Hong Kong to launch K3 Legal Hong Kong, an association with Fred Kan & Co, a law firm with a long history in Hong Kong and a network covering Mainland China, including the Greater Bay Area, and Japan. Branded. This is the first time K3 Legal has established a presence outside of New Zealand. “K3’s expansion into Hong Kong marks a significant milestone in our journey, made possible through our association with Fred Kan & Co. This move opens up a world of opportunities for investors, private equity, family offices, high net worth individuals and companies by streamlining inbound and outbound market entry, eliminating the need for external legal counsel and ensuring a seamless experience for all parties involved,” said Ms Margaret Chen, K3 Legal Hong Kong head who recently relocated from K3’s office in Auckland to Hong Kong. Established in 1981 in Hong Kong, Fred Kan & Co has teams practicing in the areas of arbitration and mediation, construction, litigation, corporate and corporate finance, intellectual property, employment and real estate. “We are honoured to be associated with K3 Legal. Through this association, we can now offer a more rounded and seamless service to clients in Hong Kong, Mainland China, including the Greater Bay Area, and now, New Zealand,” said Mr Fred Kan, Founding Partner of Fred Kan & Co. “K3 Legal Hong Kong offers clients a comprehensive suite of legal solutions spanning immigration, commercial law, arbitration, and effective dispute resolution. This gives clients the strategic legal support to navigate complex challenges...

KWM Bolsters Singapore and Hong Kong Offices

February 2, 2024
Asia’s largest international law firm King & Wood Mallesons (KWM) has expanded its Partnership, welcoming three individuals across two of its offices. Gary Hamp and Indraneil Ghosh have been appointed in Singapore, and Ike Kutlaca has been appointed in Hong Kong SAR. Gary has over 12 years’ experience working in Asia, where he was co-Global Practice Group Chair of the Latham & Watkins’ banking practice and prior to that the head of the Hogan Lovells banking group in Hong Kong. He has in-depth expertise across all the major jurisdictions in the region in leveraged finance, acquisition finance, structured lending and secured syndicated financings in addition to acting for private credit funds and advising on the banking law aspects of complex restructurings. Indraneil comes with over 15 years’ experience and, having joined KWM in Singapore as a Special Counsel in 2021, has been advising KWM clients in the funds management, private equity, and M&A space. Having spent the founding years of his career in London, he has subsequently worked across major international fund centres in the Asia Pacific Region including Dubai, Singapore and Sydney. “Gary’s broad banking & finance capability, coupled with Indraneil’s deep knowledge of fund formation and investments, are tremendous additions to KWM’s Singapore banking and funds offering, and will complement and strengthen our existing capability in these areas across our other offices in the region. We’re extremely pleased to welcome Gary and Indraneil to the KWM partnership; we know their appointments will be welcomed by clients,” commented KWM Australia Chief Executive Partner Renae Lattey. Ike has over 12 years’ experience, having spent four years at the KWM Melbourne office before joining the Hong...