The Securities and Futures Commission issued a statement to clarify its position after the police arrests of top profiteers from last month’s Next Digital rally sparked concerns.
A press conference by the Hong Kong police’s Narcotics Bureau indicated that investigations are underway against the 15 arrested individuals who are suspected of conspiracy to defraud, money laundering and false trading with the latter offense falling into the remit of the SFC’s Securities and Futures Ordinance (SFO).
«As the securities markets regulator in Hong Kong with a responsibility to investigate and enforce against breaches of the SFO, the SFC considers that it is in the public interest for it to clarify its position in relation to this matter,» the statement said, underlining «numerous inquiries» received regarding the matter.
See MoU
According to the SFC, greater assistance of the local police is in accordance to a memorandum of understanding (MoU) between the two entities signed in 2017 which commits to «collaborate and cooperate to the fullest extent possible to perform their regulatory and enforcement functions effectively in relation to crimes or illicit activities relating to the securities and futures industry».
Should local police make requests under the MoU, the SFC will engage its surveillance, supervisory or investigatory powers to obtain and share relevant information, «provided that the request concerns potential offenses under which both the SFC and the Police have jurisdiction, for example, money laundering».
Police: Active Role in Markets?
The Next Digital rally saga has garnered concerns about potential market intervention influenced by political factors. The surge in the pro-democracy media firm’s stock price was widely viewed as a historic showing of solidarity in response to the arrest of its founder and vocal critic of Beijing, Jimmy Lai.
Thus far, police have made the arrests based on the claims that the trading patterns of the 15 individuals were very similar; doubts about the origins of their funds; and suspicions that some had created the «illusion» through social media posts that many were trading Next Digital shares – a claim that contradicts the common narrative that Hong Kongers had bought the stock purely on their own accord.
«Investigation into market misconduct offenses, such as false trading, often involves complex questions of law and evidence, as well as the need for expert evaluation in relation to securities market functioning, trading methods and investor behavior,» the regulator added. «The SFC is ready to respond to any requests made by the Police under the MOU for this type of assistance in relation to any potential offenses under the SFO.»
