Guide to Secrecy Provisions in Hong Kong: What to Do When Under Investigation

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Introduction

On 2 January 2025, a Hong Kong solicitor was convicted for breaching the secrecy provisions under the Securities and Futures Ordinance (SFO) by disclosing confidential information related to an ongoing SFC investigation into suspected ramp-and-dump schemes. The Eastern Magistrates’ Courts found the solicitor guilty and imposed a fine of HK$25,000, along with an order to pay the Securities and Futures Commission’s investigation costs. This case serves as a timely reminder of the stringent confidentiality obligations that govern regulatory investigations in Hong Kong, highlighting the serious implications of unauthorized disclosures.

Secrecy Provisions Overview

The SFO establishes critical secrecy obligations primarily in Section 378 of the SFO. This section mandates that individuals involved in investigations must not disclose any information obtained through their roles without proper authorization.  Specifically, Section 378(7) of the SFO stipulates that where information is disclosed by a specified person pursuant to the relevant provisions of the SFO:

(a) the person to whom that information is so disclosed;

(b) any other person obtaining or receiving the information, whether directly or indirectly, from the person referred to in paragraph (a), shall not disclose the information, or any part thereof, to any other person, unless—

(i) the Commission consents to the disclosure;

(ia) if the specified person is a recognized exchange company, the Commission or the recognized exchange company consents to the disclosure; 

(ii) the information or the part thereof (as the case may be) has already been made available to the public;
 
(iii) the disclosure is for the purpose of seeking advice from, or giving advice by, counsel or a solicitor or other professional adviser acting or proposing to act in a professional capacity in connection with any matter arising under any of the relevant provisions;
 
(iv) the disclosure is in connection with any judicial or other proceedings to which the person or the other person referred to in paragraph (a) or (b) (as the case may be) is a party; or
 
(v) the disclosure is in accordance with an order of a court, or in accordance with a law or a requirement made under a law.
 

In addition to the SFO, the Prevention of Bribery Ordinance (POBO) imposes significant restrictions on disclosures related to investigations.  Section 30 of the POBO criminalizes unauthorized disclosures regarding a person’s identity under investigation or any details about that investigation.  This provision applies universally, covering both public officials and private individuals involved in corruption-related investigations.

Regulatory Investigations

The SFC wields extensive powers to investigate various forms of misconduct, including insider trading and false accounting.  The ICAC similarly investigates corruption and bribery offenses, often collaborating with the SFC to address corporate misconduct effectively.  A recent joint operation led to the arrest of executives from a listed company accused of fraudulent activities totaling HK$120 million, showcasing the importance of inter-agency cooperation in maintaining market integrity.

What to Do When Subject to Investigation

If you find yourself subject to an investigation by the SFC or other regulatory bodies, it is crucial to take immediate and informed steps:

  1. Seek Legal Counsel: Engage with legal professionals who specialize in regulatory investigations. They can provide guidance on your rights and obligations during the investigative process.
  2. Understand Your Rights: Familiarize yourself with your rights under the SFO and POBO, including your right to remain silent and not self-incriminate.
  3. Document Everything: Keep detailed records of all communications related to the investigation. This documentation can be invaluable for your legal counsel.
  4. Avoid Public Statements: Refrain from making public comments about the investigation or discussing it on social media, as this could complicate your situation further.
  5. Prepare for Interviews: If called for an interview by authorities, prepare thoroughly with your legal counsel to ensure you understand what will be discussed and how to respond appropriately.
  6. Review Compliance Policies: Ensure that your organization’s compliance policies are robust and up-to-date to prevent future issues.

Implications of Breaching Secrecy Provisions

The recent conviction of the solicitor marks a pivotal moment in Hong Kong’s legal landscape as it represents a clear enforcement of secrecy obligations during regulatory investigations.  This case underscores the severe consequences of unauthorized disclosures, which can lead to criminal charges under both the SFO and POBO.  Organizations are encouraged to implement robust compliance mechanisms to navigate these complex regulations effectively.

Conclusion

In summary, Hong Kong’s secrecy provisions are vital for safeguarding financial market integrity during investigations by regulatory bodies like the SFC, ICAC, and HKEx.  These provisions protect sensitive information and reinforce public confidence in regulatory processes. The recent case involving the solicitor serves as a potent reminder for all stakeholders about the critical importance of adhering to these obligations. 

YTL LLP recognizes that navigating these complexities requires not only an understanding of legal frameworks but also strategic foresight.  Contact us to learn more about how our team can help you navigate the complex legal and regulatory landscape.

best lawyer hong kong solicitor alfred leungAlfred Leung, Partner

E: alfredleung@hkytl.com T: +852 3468 7202

 

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.