SFC note redefines co-operation in proceedings

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Recent years have seen an increasing number of cases that were concluded following settlement discussions with the Securities and Futures Commission (SFC). In 2006, the SFC published a guidance note on “co-operation”, and the SFC’s practice
has continuously evolved since then.

The SFC finally issued a new version, on 12 December 2017, to update the general market in relation to its most current approach to co-operation. The new guidance note redefines “co-operation” in disciplinary, civil court and Market Misconduct Tribunal proceedings.

KEY FEATURES

Importance of timely co-operation with the SFC. A recurring theme in the new guidance note is the benefit of taking early and proactive steps. Timeliness has a major impact on any sanctions to be imposed by the SFC. Under the old note, the maximum reduction of a disciplinary sanction is either a reduction of the type of sanction by one order of magnitude (e.g., from a revocation of licence to a suspension) or 33% of the penalty. The new guidance note sets out a new scale of discounts – the later the co-operation occurs, the less benefit a party will receive.

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Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at danian.zhang@bakermckenzie.com

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