ENG-2012 — Page 106

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Financial and Monetary Affairs

will continue its investor education role through this subsidiary that also includes other regulators' members.

At the end of 2012, there were 39,119 licensed entities, including securities brokers, futures dealers, investment advisors and fund managers, as well as their representatives, and 117 registered institutions, such as banks, engaging in regulated activities such as dealing and advising on securities and futures.

Statistics on licensing for SFC-regulated activities (year-end)

2010

2011

2012

Licensed entities

38,022

39,296

39,119

Of which:

Licensed corporations

Licensed individuals

1,731

1,804

1,897

36,291

37,492

37,222

Registered institutions

109

110

117

Market Misconduct

In 2012, 15 individuals and two corporations were successfully prosecuted for various criminal offences, including insider dealing, illegal short-selling and market manipulation. In addition, the SFC completed civil proceedings against a formerly-listed company over false or misleading statements inducing trading in the company's shares and revoked the licence of the sole sponsor which managed that company's listing application. Court orders saw the return of over $1 billion to investors who were affected by the misconduct.

Additionally the SFC obtained compensation orders in two cases involving listed companies, including a case against a former CEO of a listed company. One intermediary was disciplined for internal control failings regarding the disclosure of certain fees and charges in secondary- market transactions of OTC bonds, options and structured notes, leading to substantial compensation being paid in relation to over 3,000 transactions.

The Market Misconduct Tribunal (MMT), established in 2003, conducts civil proceedings and hears cases referred to it following investigation by the SFC. In 2012, the MMT heard four cases and concluded two cases in which three persons were found to have engaged in market misconduct. They were ordered by the MMT to disgorge profits arising from the misconduct and to pay the costs of investigation and proceedings, and were disqualified from being company directors.

Recent Developments

In June 2012, a requirement took effect for weekly reports of the net short positions that reach or exceed the specified reporting threshold on a stock-by-stock basis. To provide further information to the market, the SFC started publishing the aggregate short positions of each eligible stock on an anonymous basis on its website from September 2012.

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