The Securities and Futures Commission of Hong Kong has issued a restriction notice to Kingsway Financial Services Group Ltd to stop it from processing cash and shares held in a client's account that it suspects of holding the proceeds of insider dealing.

KFS is not subject to the SFC’s investigation into suspected insider dealing and the Restriction Notice does not affect KFS’s operations or its other clients.  KFS has rendered full assistance to the SFC during the investigation.

The restriction notice prohibits KFS, without prior written consent from the SFC, from processing any instructions from the client (or anyone authorised to operate the account) with respect to the shares of a Hong Kong-listed company, including: (i) withdrawing the shares and/or transferring monies arising from the disposal of the shares; and/or (ii) disposing or dealing with the shares. KFS is also required to notify the SFC upon receipt of any of these instructions.

The SFC considers that the issuance of the restriction notice, which prevents the dissipation of suspect monies in the account, is desirable in the interest of the investing public. The fact that it is stating this on its website suggests that this is a legal hurdle it must jump over before issuing such a notice.