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Hong Kong and USA sign MOU

Chris Hamblin, Editor, London, 7 March 2016

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The Hong Kong Securities and Futures Commission and the US Department of Justice have signed a slightly one-sided memorandum of understanding to formalise and strengthen their co-operation in the handling of criminal cases under the Securities and Futures Ordinance (SFO) and other relevant legislation.

Superseding the existing arrangements between the two parties, the MoU is expected to smooth the way for the next generation of international rate-rigging cases that emanate from the United States.

The SFC will refer the following types of case to the DoJ for advice about whether criminal prosecution should be instituted according to the Prosecution Code of Hong Kong and/or to determine whether the case should be prosecuted in the Court of First Instance, a district court or magistrates' courts:

  • market misconduct offences under Part XIV of the SFO and offences to fraudulently or recklessly induce others to invest money under section 107 of the SFO;
  • offences under the SFO and its subsidiary legislation which involve an element of intent to defraud (other than those under Part XIV and section l0T of the SFO);
  • offences under the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32, the Companies Ordinance, Cap 622 and the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance, Cap 61.5 that lie within the SFC's purview;
  • indictable offences that may be dealt with summarily for which the maximum term of imprisonment following conviction on indictment exceeds two years; and
  • any other cases in which the SFC considers it necessary to seek advice from the DoJ about the suitability of a prosecution on indictment.

The DoJ, for its part, is making no promises about how or when to prosecute cases that the SFC refers to it, but it promises to "consider any views expressed."

When the DoJ takes over an appeal, the SFC will give it all the case materials and, if asked, provide all necessary assistance to the DoJ for the purpose of conducting the appeal.

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