Mis-Selling: New Suitability Requirements and Other Developments

Described by the Securities and Futures Commission (“SFC”) as the “cornerstone of investor protection”, suitability obligations continue to evolve both in terms of the standard of conduct required to comply but also in terms of the cost of failure to comply. With fines in one case tabulated at HK$5 million per failure to comply and both the SFC and the Hong Kong Monetary Authority (“HKMA”) ever keen to promote these obligations, it has never been more important for persons licensed or registered with the SFC to ensure compliance. Arguably, the introduction of new requirements to ensure the suitability of so-called “complex products” represents another step in denying investors the freedom to make their own choices, absolving investors of responsibility for their own choices and imposing advisory duties upon market players whose business models may be non-advisory in nature. These requirements appear to seek to use regulatory means to counter a judicial system that has tended to be less sympathetic to claims of mis-selling.

Please join us for the lunch time seminar as we provide our perspective on the evolving requirements of the suitability obligations and review how regulated firms can minimize the risk of claims of mis-selling in carrying out their business and how they should respond to allegations of mis-selling.

Speakers

Timothy Loh, Managing Partner

Mr. Loh has extensive experience advising SFC regulated firms on all aspects of the conduct of their business and representing such firms not only in proceedings commenced by the SFC alleging misconduct but also in court and arbitral proceedings commenced by clients.

Francis Comtois, Partner

Mr. Comtois is a litigator whose practice includes representing clients in SFC investigations and disciplinary proceedings, the resolution of commercial disputes related to the provision of financial services and white collar criminal proceedings.

Described by the Securities and Futures Commission (“SFC”) as the “cornerstone of investor protection”, suitability obligations continue to evolve both in terms of the standard of conduct required to comply but also in terms of the cost of failure to comply. With fines in one case tabulated at HK$5 million per failure to comply and both the SFC and the Hong Kong Monetary Authority (“HKMA”) ever keen to promote these obligations, it has never been more important for persons licensed or registered with the SFC to ensure compliance. Arguably, the introduction of new requirements to ensure the suitability of so-called “complex products” represents another step in denying investors the freedom to make their own choices, absolving investors of responsibility for their own choices and imposing advisory duties upon market players whose business models may be non-advisory in nature. These requirements appear to seek to use regulatory means to counter a judicial system that has tended to be less sympathetic to claims of mis-selling.