How to handle SFC investigations and interviews?

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The Securities and Futures Ordinance (Cap 571) (the “SFO”) empowers the Securities and Futures Commission (the “SFC”) to conduct investigations when it has reasonable cause to believe an offence such as market misconduct, defalcation, fraud and misfeasance has taken place under the SFO.  In addition, the SFC may issue a notice to require a person to produce records, documents and explanation relevant to the investigation. This article discusses how to handle SFC investigations and interviews when the regulator knocks at your door.

When a SFC issues to you an investigation notice under section 183 of the SFO, you should:

  • Confirm with the SFC whether you are assisting in the investigation or a person under investigation (“PUI”). It is particularly important to seek legal advice if you are a PUI.
  • Consider the scope of investigation, identify the relevant records and documents (including electronic data) to set out your version of facts, and consider if legal professional privilege (“LPP”) is applicable. LPP is a person’s right to withhold lawyer-client communications from inspection or production in a regulatory investigation or legal proceedings.
  • Comply with the deadline imposed by the SFC for document production. If you need more time to produce the information requested, you should contact the SFC case officer with a valid reason. It is an offence to fail to produce the information requested to the investigator.

When the SFC requires you to attend an interview under section 183 of the SFO, you should:

  • Confirm with the SFC whether you are assisting in the investigation or a PUI. If you are a PUI, attend the interview with a lawyer to protect your interest.
  • Review the relevant records and documents to familiarize yourself with the background and your version of facts before the interview.
  • Attend the interview on time. If you are unavailable to attend at the scheduled time, you should contact the SFC case officer with a valid reason to reschedule. It is an offence to fail to attend an interview without a valid reason.

At the SFC interview:

  • You must answer all questions and tell the truth. If you are not sure about, do not know or do not remember your answer to the question, tell the case officer the same. Do not make a guess. It is an offence to fail to respond to a question raised by the investigator.
  • If you believe your answer may be self-incriminating, claim privilege before answering the question, such that the answer will not be admissible as evidence in criminal proceedings against you.

Your obligation under section 378 of the SFO to preserve secrecy:

  • It is a criminal offence to disclose anything about an SFC interview to anyone. There is, however, a limited scope of exception to your secrecy obligation, which includes disclosure to your lawyers for legal advice.
  • It is possible that you write to the SFC case officer to seek a waiver to disclose a certain piece of information to a certain person, and the reasons behind.

It is also prudent for a company under SFC investigation to arrange separate legal representation for its employees who are required to attend SFC interviews, because the company and employees are likely to have different interests.

The possible consequences of an SFC investigation include disciplinary action, commencement of proceedings at the Market Misconduct Tribunal, civil proceedings or criminal prosecution. Therefore, it is vital that a person subject to SFC investigation or interview takes the matter seriously from the beginning and seek legal advice promptly.

Contact us today to learn more about how our team can help you navigate the complex legal and regulatory landscape. 

Tiffany lee

Tiffany Lee, Of Counsel

(E: tiffanylee@hkytl.com T: +852  3468 7038)

 

This article is introductory in nature. Its content is current at the date of publication.  It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this article. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.