TechFlow news, the Hong Kong Securities and Futures Commission (SFC) issued a circular on October 9 stating that several asset management firms have engaged in serious misconduct in managing private funds and discretionary accounts. Dr. Yip Chi Hang, Executive Director of the SFC's Intermediaries Division, said these practices have seriously undermined investor confidence in Hong Kong's market, and the SFC will prioritize combating such misconduct in the asset management industry in the coming year.
The circular highlights issues including conflicts of interest, inadequate risk management, investments exceeding authorized scope, improper disclosure to investors, and inappropriate valuation methods. To address these concerns, the SFC will conduct thematic reviews focusing on whether asset management firms comply with applicable regulatory requirements when managing private funds. Dr. Yip warned that if serious violations or misconduct are found during the reviews, the SFC will not hesitate to hold senior management of asset management firms accountable.
The SFC also urges investors to exercise caution when making investment decisions, to obtain up-to-date information from asset management firms, and to ensure that private funds or authorized investment scopes align with their own investment objectives and risk profiles. The circular emphasizes that boards and senior management of asset management firms—including key function holders and responsible officers—bear primary responsibility for ensuring proper standards of conduct, and should strengthen oversight, monitoring, and compliance functions to meet all applicable regulatory requirements.
