Challenging The SFC: What Every Compliance Officer Needs To Know

The Securities and Futures Commission ("SFC") interacts with licensed and registered persons in 2 key ways. First, it regulates their conduct of business, bringing enforcement action where it considers that they have breached applicable laws or regulations. Secondly, it acts as a gatekeeper for new investment products and services.

In these 2 respects, the powers of the SFC are broad. In the absence of a final disciplinary decision, it is the rare licensed or registered person who is unafraid to challenge the SFC in the exercise of its discretion and to risk damaging its ongoing relationship with the SFC.

However, the experience in the past 4 years demonstrates that if nothing else, the SFC is subject to the constraints of the law. Where it acts unreasonably, in bad faith or otherwise improperly, it may be successfully challenged through the Securities and Futures Tribunal ("SFAT"). Consequently, whilst no decision to challenge the SFC in an open and adversarial manner should be