Hong Kong SFC's Dai Lin: Not Bound by Traditional Litigation, Pursuing Effective Market Regulation Through Diverse Means

Title context: Hong Kong SFC's Dai Lin: Not Bound by Traditional Litigation, Pursuing Effective Market Regulation Through Diverse Means Text: M. Duignan, Executive Director of the Enforcement Division of the Hong Kong Securities and Futures Commission (SFC), delivered a keynote speech titled "New Enforcement Thinking: Opening Up New Paths, Pursuing Excellent Outcomes" at the 10th Annual Asian Company and Securities Law Symposium. He proposed that any enforcement measure that is lawful, feasible, and efficient in achieving the desired results should be pursued. The Hong Kong SFC will no longer rely solely on traditional litigation pathways, and will use diversified tools to maintain market order and effectively seek substantive compensation for minority shareholders harmed by misconduct. Duignan stated that traditional enforcement processes such as investigations, hearings, and tribunals remain indispensable, but they are not the only solution. At the regulatory level, risks can be resolved before the situation escalates into lengthy judicial proceedings through means such as advance warnings, voluntary license surrenders by institutions, case settlements, and immediate trading suspensions. The speech listed several cases of practical regulatory tools: 1. Advance warnings to guide the market: In January of this year, the "Circular to Licensed Corporations Regarding Sponsor Work" was issued, clearly setting out unacceptable conduct to the market before risks erupt, implementing upfront risk alerts; 2. Targeting repeat-offender intermediaries: For intermediaries with long-term, continuous misconduct, they are encouraged to voluntarily surrender their licenses; 3. Using settlement mechanisms to lock in compensation funds: Citing the EVERGRANDE financial fraud case settlement with PricewaterhouseCoopers and the GIORDANO INT'L share acquisition settlement scheme as examples, settlement arrangements are used to quickly lock in compensation funds and protect minority shareholder rights; 4. Rapid intervention after risks arise: Suspending stock trading for problematic listed companies, taking regulatory action before damage further expands. Duignan emphasized that the core orientation of this new enforcement approach is to balance regulatory efficiency with the protection of minority shareholder rights, flexibly selecting various lawful and feasible means to achieve regulatory objectives.