SFC enforcements highlight continued focus on market integrity

16 September 2025 | Asia | Articles

The SFC continues to intensify its enforcement activity, with several notable cases underscoring the consequences of compliance failures. These actions covering fund management oversight, disclosure obligations, client asset protection and internal controls reflect the regulator’s continued focus on market integrity.

Recent cases involving Zhu Hong, HSBC, Amber Hill Capital, Nerico Brothers and Deutsche Bank, highlight common compliance challenges and the importance of robust internal controls.

Zhu Hong: Deficiencies in Fund Oversight and AML/CTF Controls

Zhu Hong, a former director and manager-in-charge at Kylin International (HK) Co., Limited, was prohibited from regulated activities for 12 months and fined HK$400,000. The SFC found inadequate oversight of anti-money laundering and counter-terrorist financing (AML/CTF) controls, including weaknesses in risk assessment and monitoring.

This case reinforces the importance of effective oversight and the personal accountability of senior management in ensuring compliance with AML/CTF obligations.

HSBC: Disclosure Issues in Research Publications

The SFC reprimanded and fined The Hongkong and Shanghai Banking Corporation Limited (HSBC) HK$4.2 million for disclosure failures in over 4,200 research reports issued between 2013 and 2021. The reports did not accurately disclose investment banking relationships with covered companies.

While no client losses were reported, the case highlights the importance of transparency and regular compliance reviews to ensure accurate public disclosures.

Amber Hill Capital and Nerico Brothers: License Revocations for Misappropriation

The SFC revoked the licenses of Amber Hill Capital Limited (AHCL) and Nerico Brothers Limited (NBL), imposing lifetime bans on their senior management. AHCL directors Neo Ng Yu and Simon Ng She Chun were found to have misappropriated approximately US$154 million from a client’s account using false information and fabricated documents. Similarly, NBL’s director, Jerff Lee Cheuk Fung, was banned for life for his role in the same scheme.

These cases underscore the critical importance of senior management responsibility, safeguarding client assets and maintaining strong internal controls.

Deutsche Bank: Systemic Control Failures

Deutsche Bank was fined HK$23.8 million for multiple breaches, including overcharging clients HK$39 million, misclassifying product risk ratings, and failing to disclose investment banking ties in research reports.

The case demonstrates the need for comprehensive internal controls and regular audits to prevent systemic failures that can harm clients and undermine market confidence.

Key themes and trends

Recent enforcement actions point to several emerging trends in Hong Kong’s regulatory environment:

Increased accountability: Senior individuals are being held personally responsible for compliance failures, regardless of licensing status.

Disclosure and transparency: The HSBC and Deutsche Bank cases highlight the need for accurate disclosures of investment banking relationships and fee structures.  Firms must implement robust systems to prevent overcharging and ensure fee discounts are applied correctly.

Client asset protection: Safeguards against misappropriation are a growing focus, in line with global standards.

Internal control focus: Weaknesses in governance and control frameworks are under closer examination.

In today’s environment, where regulatory expectations are rising, firms must adopt a proactive approach to compliance management.

How Ocorian can support your compliance efforts

Taking a proactive approach to compliance is often easier said than done. We support our clients to keep one step ahead of ever-evolving regulatory expectations:

Tailored policies and procedures: We help develop robust compliance manuals and policies tailored to your firm’s specific operations, ensuring alignment with SFC’s regulations.

Gap analysis: We conduct thorough gap analysis to identify weaknesses in existing compliance programmes, such as inadequate disclosure mechanisms or risk management failures and recommend enhancements.

Strengthening controls: We perform risk assessments to identify vulnerabilities, such as inadequate AML measures or operational risks and implement mitigating controls.

Regulatory health checks: We conduct mock SFC inspections or health checks to prepare firms for regulatory reviews, focusing on high-risk areas such as client categorisation, fee disclosures and conflict management,

Reach out to our team to explore how we can assist you.