Importance of compliance with the secrecy requirements under the SFO re-affirmed, as a Hong Kong practising solicitor is convicted for the first time

 

On 2 January 2025, a Hong Kong practising solicitor was convicted for violating the secrecy requirements under section 378 of the Securities and Futures Ordinance (Cap. 571) (“SFO”). This is the first conviction against a practising solicitor for contravention of the secrecy provision under the SFO. It serves as a useful reminder that the secrecy provision applies not just to licensed persons but all involved in the work performed by the Securities and Futures Commission of Hong Kong (“SFC”).

 

Secrecy requirements under section 378 of the SFO

 

Under section 378 of the SFO, a person who becomes aware of matters in the course of assisting the SFC in performing its function shall not disclose such matters to any other person unless the SFC consents or an exception applies (e.g. the information has already been made to the public, the disclosure is for the purpose of seeking or giving legal advice, the disclosure is in accordance with a court order or a legal requirement).

 

A person who breached such requirement and is convicted on indictment is liable to a maximum penalty of 2 years' imprisonment and a fine of HKD 1 million; A person convicted on summary is liable to a maximum penalty of 6 months' imprisonment and a fine of HKD 100,000.

 

Case Background

 

In this case, the Defendant is a practising solicitor and the principal of a law firm in Hong Kong. The Defendant, as the legal representative of an individual who is a subject of SFC’s investigations of suspected ramp-and-dump cases, received confidential information in relation to a restriction notice that SFC disclosed to the individual. The Defendant disclosed the confidential information to two other individuals, in breach of the secrecy provision under the SFO.

 

Decision

 

The Defendant pleaded guilty to one count of contravention of the secrecy provision. He was fined HKD 25,000 and was ordered to pay the SFC's investigation costs.

 

Key Takeaways

 

The SFC has repeatedly emphasised the importance of compliance with the secrecy provision in the SFO. In June 2024, the SFC suspended a former responsible officer of China On Securities Limited, for four years, for various breaches, including violation of the statutory secrecy provision as he allegedly disclosed confidential information regarding the SFC's investigation to another individual.

 

The present case is a first conviction against a practising solicitor of an offence for contravening the secrecy provision. It serves as a useful reminder that the secrecy provision applies not just to licensed persons, but all involved in the work performed by the SFC. It is advisable that the disclosure of information relating to matters such as enquiries, inspections or investigations by the SFC should only be done, even internally, on a strictly need-to-know basis. When handling internal management reporting or invoices of professional service providers (such as law firms), companies should exercise care to ensure that they do not inadvertently disclose confidential information.

 

 

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