On 2 January 2025, the Hong Kong’s Securities and Futures Commission (HK SFC), announced the conviction against a practicing solicitor for breaching the secrecy provisions under the Hong Kong Securities and Futures Ordinance (HK SFO). The Eastern Magistrates’ Courts found Mr. Tse Yin Fung, principal of the law firm O Tse & Co., guilty of disclosing confidential information in violation of the HK SFO. Tse pleaded guilty to the charge and was fined HK$ 25,000 while being ordered to pay the HK SFC’s investigation costs.
On 9 February 2021 when Mr. Tse Yin Fung, acting as the legal representative for an individual under HK SFC investigation, disclosed confidential information to two other individuals. This information concerned a restriction notice issued by the HK SFC to the client, prohibiting their brokerage firm from dealing with certain assets in their trading account. Such notices are a key tool in the HK SFC’s investigations into suspected market misconduct, including ramp-and-dump schemes (a manipulative tactic where fraudsters artificially inflate share prices before selling at a profit).
Under the HK SFO, Sections 378(7) and 378(11) explicitly prohibit unauthorised disclosure of confidential information. Breaches carry penalties, including fines of up to HK$ 1 million and two years’ imprisonment upon conviction on indictment or upon summary conviction, to a maximum fine of HK$ 100,000 and imprisonment for up to six months. A regulated person may, in addition, be disciplined. Mr. Tse Yin Fung’s case is the first where a solicitor has been held accountable under these provisions for breach of legal obligations of legal practitioners in maintaining secrecy in regulatory investigations.
Nearly four years passed between the disclosure in February 2021 and the conviction in January 2025. The HK SFC’s investigation into the ramp-and-dump syndicate dealt with the increasing role of social media in stock market fraud, where fraudsters lure investors with misleading information to drive up share prices artificially.
Mr. Christopher Wilson, Executive Director of Enforcement at the HK SFC, stating that: “Legal professionals should maintain the highest standard of professional conduct as any wrongdoing while acting on behalf of their clients may jeopardise the integrity of our investigation.”
(Source: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=25PR1)
