Updates
Hong Kong’s SFC and IA Join Forces to Tackle Cross-Sector Financial Irregularities
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On 26 July 2024, the Securities and Futures Commission (SFC) and the Insurance Authority (IA) united to address suspected irregularities involving the investment portfolio of Tahoe Life Insurance Company Limited (Tahoe Life). This unprecedented collaborative effort represents a significant step in safeguarding the integrity of Hong Kong’s financial markets through cooperation between departments.
The IA announced the appointment of Joint and Several Managers to take full control of Tahoe Life’s affairs and property. This decisive action is the culmination of over four years of meticulous and dedicated work.
The roots of this collaboration date back to May 2020, when the IA sought the SFC’s assistance concerning certain investments made by Tahoe Life. Subsequent inspections by the SFC on several licensed fund managers revealed that the assets held by Tahoe Life were channelled into financial instruments linked with a related party on the Mainland.
In June 2021, the SFC and the IA conducted a joint operation on an SFC-licensed fund manager, marking the first collaborative effort since the two regulators signed a Memorandum of Understanding (MoU) in September 2020. This joint operation paved the way for a more cohesive approach to tackling financial misconduct.
The SFC’s investigation led to disciplinary action against the fund manager involved. The SFC and the IA continue to foster a compliance culture that upholds the highest standards of professionalism and integrity in the financial industry.
This united effort highlights our shared dedication to upholding the integrity of Hong Kong’s financial markets by ensuring no misconduct putting investors in harm’s way falls through the cracks between different regulators. As close partners, the SFC and the IA will continue to work closely to ensure resilience, accountability and trust are firmly embedded in the financial sector.
The IA expressed deep appreciation to the SFC for providing valuable support during an investigation on related party transactions entered into by Tahoe Life. This bears testimony to the efficacy of the MoU in protecting the interest of policyholders and the image of Hong Kong as an international financial centre.
The integration of regulatory efforts between the SFC and the IA exemplifies a forward-thinking approach to tackling complex financial issues. By leveraging each other’s strengths and resources, these regulatory bodies can more effectively identify, investigate, and resolve irregularities, ensuring a higher standard of oversight and protection for investors.
This proactive collaboration sets a benchmark for regulatory agencies worldwide, demonstrating the benefits of shared expertise and joint operations. As financial markets become increasingly complex, such integrated efforts are crucial in maintaining market integrity and investor confidence.
The SFC’s and IA’s determination to tackle complicated issues reflects their commitment to maintaining Hong Kong’s reputation as a robust and reliable international financial centre. By adopting a cooperative and comprehensive approach to regulation, they ensure that even the most sophisticated schemes are scrutinized and addressed, thereby safeguarding the interests of all market participants. This not only reinforces the credibility of Hong Kong’s financial markets but also serves as a model for regulatory practices globally and highlights the importance of collaboration and stringent oversight in fostering a secure and transparent financial environment.
(Source: SFC and IA Joined Forces to Tackle Cross-sector Irregularities)