Regulators in Hong Kong have secured their first conviction against a solicitor for breaching secrecy rules.

A Hong Kong practicing solicitor, Mr Tse Yin Fung, was convicted today at the Eastern Magistrates’ Courts for violating the secrecy provision under the Securities and Futures Ordinance (SFO) following a prosecution brought by the Securities and Futures Commission (SFC).

Tse, the principal of the law firm, O Tse & Co., pleaded guilty to one count of contravention of the secrecy provision and was fined $25,000. He was also ordered to pay the SFC’s investigation costs.

The Court heard that Tse, acting as the legal representative of an individual, received confidential information regarding a restriction notice that the SFC had disclosed to that individual (Note 1). The confidential information was subject to the secrecy provision under the SFO. After receiving the confidential information, Tse disclosed the information to two other individuals on 9 February 2021 (Note 2).

This marks the first occasion in which a Hong Kong practicing solicitor has been convicted of an offence for contravening the secrecy provision under the SFO. The investigation into this breach originated from the SFC’s investigations of suspected ramp-and-dump cases concerning a sophisticated syndicate (Note 3).

The SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “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.”

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Notes:

1. The individual is a subject of SFC’s investigations of suspected ramp-and-dump cases. The restriction notice prohibits the relevant brokerage firm from dealing with or processing certain assets held in the trading account of that individual.  Please see the SFC’s press release dated 9 February 2021.
2. The disclosure by Tse was in violation of sections 378(7) and 378(11) of the SFO. A person who breaches the secrecy obligation is liable to prosecution and upon conviction on indictment to a maximum fine of $1 million and imprisonment for up to two years or upon summary conviction, to a maximum fine of $100,000 and imprisonment for up to six months. A regulated person may, in addition, be disciplined.
3. A social media ramp-and-dump scam is a form of stock market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then induce investors via social media platforms to purchase the shares they “dump” at an artificially high price.