Hong Kong's Securities And Futures Commission Issues Restriction Notice To A Broker To Stop A Client From Withdrawing Shares And Transferring Money Connected With Suspected Insider Dealing

The Securities and Futures Commission (SFC) has issued a Restriction Notice to Kingsway Financial Services Group Limited (KFS) prohibiting it from processing cash and shares held in a client account that holds proceeds of suspected insider dealing (Notes 1 & 2).

KFS is not subject to the SFC’s investigation into suspected insider dealing and the Restriction Notice does not affect KFS’s operations or its other clients.  KFS has rendered full assistance to the SFC during the investigation.

The Restriction Notice prohibits KFS, without prior written consent from the SFC, from processing any instructions from the client (or anyone authorized to operate the account) with respect to the shares of a Hong Kong-listed company, including: (i) withdrawing the shares and/or transferring monies arising from the disposal of the shares; and/or (ii) disposing or dealing with the shares.  KFS is 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 SFC’s investigation is continuing.

Notes:

1. The Restriction Notice is issued pursuant to sections 204 and 205 of the Securities and Futures Ordinance (SFO).
2. KFS is a corporation licensed under the SFO to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.