On 12 December 2017, the Securities and Futures Commission (SFC) issued an updated guidance note regarding the benefits of cooperating on its investigations and enforcement proceedings (Guidance Note). The SFC also published a new set of Frequently Asked Questions to supplement the Guidance Note (FAQs).
As noted in the FAQs, one of the key changes in the Guidance Note is the inclusion of an updated section on disciplinary matters. In particular, the SFC has divided its disciplinary process into three stages and provided clarity on the sanction reductions a party may receive for cooperating and resolving proceedings at each stage.
The Guidance Note provides that for firms and individuals, the SFC considers cooperation to include compensating affected investors fully and promptly, and for firms, it includes taking appropriate remedial measures and commissioning third-party reviews to identify failings.
In the SFC news release for the issue of the Guidance Note, Mr Thomas Atkinson, the SFC’s Executive Director of Enforcement noted that “For cooperation to be recognised, parties must go above and beyond their statutory and regulatory obligations. Those who take proactive steps to resolve our regulatory concerns in a timely manner will benefit the most from cooperation, which could result in significant savings of time and money.”
The Guidance Note, and related guidance, is a timely reminder for market participants of matters to be cognisant of, and consider including in their potential remedial plans, as and when they become aware of a possible SFC investigation or enforcement action.