Hong Kong SFC Freezes Suspected Insider Dealing Assets

Hong Kong's securities regulator has ordered a broker to stop processing cash and shares held in a client account, saying they were suspected to be the proceeds of insider dealing. The broker, Kingsway Financial Services Group Limited, was issued with a Restriction Notice prohibiting it from processing the client assets. The broker itself is not subject to the investigation, the Securities and Futures Commission ("SFC") said. The restriction notice also does not affect the broker's operations or its other clients, the regulator added, noting that KFS has rendered full assistance to the SFC during its investigation.

The Restriction Notice prohibits KFS, without prior written consent from the SFC, from processing any instructions from the client with respect to the shares of a Hong Kong-listed company, including:

  • withdrawing the shares and/or transferring monies arising from the disposal of the shares; and/or
  • (ii) disposing or dealing with the shares.

The SFC said KFS was also required to notify the SFC upon receipt of any of these instructions.

"The SFC considers that the issue of the restriction notice, which prevents dissipation of proceeds of suspected insider dealing held in the account, is desirable in the interest of the investing public or in the public interest," the regulator said. 


North Asia editor for Thomson Reuters Regulatory Intelligence. He is based in Hong Kong.