Financial and Monetary Affairs | 73
(PRP) was established by the Chief Executive in November 2000 to review and advise the SFC on the adequacy of the internal procedures and operational guidelines governing the actions and operational decisions it takes in the performance of its regulatory functions.
PRP members are appointed by the Chief Executive. In September 2008, the Government published the PRP's seventh annual report, which concluded that the SFC had generally followed its internal procedures in handling cases under review.
Broadly speaking, the SFC's work involves licensing, supervision and monitoring of intermediaries; regulation of the public marketing of unit trusts, mutual funds and other collective investment products; regulation of takeovers, mergers and other corporate activities; listing regulation under the dual filing system for IPO applicants and issuers; supervision of markets including the exchanges and clearing houses; enforcement of securities laws and rules; and investor education.
As at year-end, there were 37 243 licensed persons, including securities brokerage firms, futures dealers and securities margin financiers, as well as their representatives, and 102 registered institutions, such as banks, engaging in regulated activities like dealing and advising on securities and futures.
Insider Dealing Tribunal and Market Misconduct Tribunal
The Insider Dealing Tribunal is an important feature of the regulatory framework for the securities market in Hong Kong. Established under the repealed Securities. (Insider Dealing) Ordinance, the tribunal looked into cases involving suspected insider dealing referred to it by the Financial Secretary. By year-end, it had concluded a total of 25 cases since it commenced operation in 1994.
When the SFO came into force on April 1, 2003, the Insider Dealing Tribunal was replaced by the Market Misconduct Tribunal (MMT), which covers five other types of market misconduct (false trading; price rigging; disclosure of information about prohibited transactions; disclosure of false or misleading information inducing transactions; and stock market manipulation) in addition to insider dealing.
The MMT decides cases on the civil standard of proof and can impose a range of civil sanctions, such as ordering the disgorgement of profits, banning a person from trading in SFC-regulated financial products and disqualifying a person from directorship or management of a company.
The MMT inquires into market misconduct that occurred on or after April 1, 2003. The Insider Dealing Tribunal continues to exist to inquire into cases of insider dealing that occurred before April 1, 2003.
The MMT concluded its first case in August 2008 and is handling three cases.
As an alternative to civil proceedings, market misconduct is subject to criminal prosecution, which, if successful, may result in more severe penalties on conviction, including up to 10 years' imprisonment or a fine of up to $10 million.
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