ENG-2013 — Page 109

4

Financial and Monetary Affairs

Statistics on Licensing for SFC-regulated Activities (year-end)

2011

2012

2013

Licensed entities

39,296

39,119

38,985

Of which:

Licensed corporations

1,804

1,897

1,956

Licensed individuals

37,492

37,222

37,029

Registered institutions

110

117

121

In 2013, the SFC enhanced regulation related to intermediaries, including the new IPO sponsor regime, and updated regulation of electronic trading. A three-month consultation was also launched in May 2013, on proposals concerning the professional investor regime. The key proposals include requiring intermediaries to comply with all Code of Conduct1o requirements. when dealing with investors who are individuals, including their wholly owned investment vehicles and family trusts, and streamlining the criteria under the Code of Conduct in assessing the knowledge and experience of corporate professional investors by removing specific tests (eg the 40 transactions per annum requirement).

The SFC's Risk and Strategy unit conducted a series of meetings with senior executives of global systemically important financial institutions (G-SIFIs) between March and August 2013 and subsequently published the 'Risk-focused Industry Meeting Series: G-SIFI Trends in Risk and Risk. Mitigation' report in December.

On the enforcement front, in 2013, disciplinary action against SFC licensees involved 35 individuals and 10 corporations with fines totalling $40.29 million; separately, 18 individuals and seven corporations were successfully prosecuted for various criminal offences, including insider dealing, illegal short-selling and market manipulation.

High profile cases during the year included legal proceedings commenced against a former chairman of another listed company over alleged embezzlement of corporate assets and false accounting. The SFC is seeking orders that the company be repaid $84 million. In addition, the SFC applied for the first time to wind up a listed company under the Securities and Futures Ordinance to protect the interests of its shareholders, creditors, and the investing public.

Separately, the SFC has secured a court order against an asset management company and three of its officers to return over $45 million to around 1,800 investors. The SFC has also secured an order from the Court of First Instance against an insider dealer, an ex-managing director of an investment bank, to pay $23.9 million to 297 investors.

The Market Misconduct Tribunal heard two cases and one case was concluded in 2013 in which a person was ordered to disgorge profits of $21.1 million arising from misconduct and was disqualified from being a company director for a period of nine months.

10 The Code of Conduct for Persons Licensed by or Registered with the SFC.

77