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REGULATORY ENFORCEMENT NEWSLETTER - ISSUE 1

A quarterly roundup of regulatory issues

2

Part XIVA of the Securities

and Futures Ordinance

(“SFO”)

With the intention of changing behaviour and

enhancing market transparency, on 1

January 2013, Part XIVA of the SFO became

law and thereafter required listed companies

to disclose inside information as soon as

reasonably practicable after it came to their

knowledge.

The trigger for disclosure (section 307B SFO) being that

the inside information has, or ought reasonably to

have, come to the knowledge of an officer of the listed

company in the course of them performing their

functions as an officer, and, a reasonable person acting

as an officer of the company would consider the

information as inside information.

On 1 January 2013, the Market Misconduct Tribunal

(“

MMT

”), an inquisitorial body established to police and

regulate market behaviour, had its jurisdiction

expanded to determine breaches of Part XIVA.

Four years down the road, we are now starting to see

the SFC’s first Part XIVA enforcement actions being

decided by the MMT.

Below, we consider the MMT’s decisions concerning:

(i)

Yorkey Optical International (Cayman) Limited;

and

(ii)

Mayer Holdings Limited.

These decisions show what the SFC expects.

They are also a benchmark for everyone else, in

particular those involved in the management of listed

companies, to take very careful notice of.

Introduction

Failing to meet the exacting standards

demanded by regulators and law enforcement

can lead to very serious consequences for

businesses and the individuals who work in

them which include criminal prosecution,

regulatory enforcement, disciplinary action, loss

of reputation and livelihood, commercial and

market damage, bad publicity, regulatory

remediation exercises and civil claims.

In this newsletter prepared by

Ian Childs,

and

those which will follow on a quarterly basis, we

will update you about notable cases and trends

in the regulatory litigation area where the fast

pace of change continues unabated and levels of

enforcement by the Securities and Futures

Commission (“

SFC

”) remain extremely high.

Whenever any interesting Hong Kong Police or

Independent Commission Against Corruption

matters arise, it is our intention to also feature

those.

I hope that you will find this newsletter

informative.

Thank you

Ian Childs

Senior associate

T: +852 2533 2884

E:

ian.childs@shlegal.com