CFA judgment gives green light to SFC enforcers

The Court of Final Appeal judgment in the Securities and Futures Commission (SFC) v Tiger Asia case gives the commission more ammunition against market misconduct, by confirming that the SFC can use section 213 of the Securities and Futures Ordinance (SFO) as a third route of enforcement.

“The SFC has successfully demonstrated that section 213 is a versatile enforcement tool against a broad spectrum of market misconduct,” Sharon Nye, a Hong Kong-based senior associate at Hogan Lovells, told China Business Law Journal. “In particular, section 213 has been particularly instrumental in extending the long arm of the SFC against foreign-based wrongdoers.”

“The sanctions available to the SFC under the section 213 procedure can be severe,” Nye said. In the Tiger Asia case, the SFC sought to ban the hedge fund from dealing in Hong Kong indefinitely. “The Tiger Asia case is a warning shot to foreign-based hedge funds trading in Hong Kong. The possibility that section 213 can be used to obtain remedies such as lifelong trading bans have a draconian impact, both on hedge funds and individual traders.