HONG KONG: SFC Issues Fine of $1.8m for Major Shareholding Disclosure Failures

Thursday June 16 2016

The Securities and Futures Commission (SFC) has reprimanded and fined Schroder Investment Management (Hong Kong) Limited (Schroder) $1.8 million for failing to disclose all notifiable interests in Hong Kong listed shares.

From August 2005 to January 2013, Schroder failed to disclose to the Stock Exchange of Hong Kong Limited (SEHK) and the relevant listed companies all notifiable interests in Hong Kong listed shares held in client portfolios and managed by Schroders plc and certain of its subsidiaries (Schroder Entities) where they did not have or were unable to exercise proxy voting rights.

Although legal advice obtained by Schroder advised that an “interest” in shares was broadly defined and was not confined to the exercise of a voting right, Schroder failed to properly follow the advice.

According to Schroder, it discovered the disclosure failures in November 2012 when it was preparing to implement a new global system for the monitoring and reporting of disclosable interests in shares. In February and March 2013, Schroder filed a total of 236 substantial shareholders notices to the SEHK to correct the disclosure notices filed for the Schroder Entities from July 2010 to January 2013.

In deciding the penalty, the SFC took into account the duration and extent of Schroder’s disclosure failings, Schroder’s self-report to the SFC upon discovery of its disclosure failings, Schroder’s co-operation with the SFC’s investigation and disciplinary process and that it has taken steps to improve its global system for monitoring and disclosing shares in Hong Kong listed companies and its clean disciplinary record.

Please click on the above link for further information.