ComplianceOne Newsletter – December 2025

The topics discussed in this monthly newsletter are as follows:

Regulatory Updates

1. FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes

Market News

2. A quarter of connecting, innovating and diversifying Hong Kong markets: SFC Report

Enforcement News - Intermediary

3. SFC Suspends Loretta LEE Si Kar for Three Months and Two Weeks Over Neglect of Duties in Safeguarding Client Assets at Tung Tai Securities

4. SFC Reprimands and Fines EFG Bank AG $10.85 Million for Regulatory Breaches and Internal Control Failures

Enforcement News - LISTCO

5. SFC Convicts and Sentences Former Vice President of Computershare to Imprisonment and Fine for Insider Dealing

6. SFC Obtains Order to Freeze $101 Million Belonging to Suspected Shadow Director in Corporate Misconduct Case Involving Teamway (1239.HK)

7. SFC Secures Conviction and Eight-Month Prison Sentence in False Trading Prosecution Involving China All Access Shares

8. SFC Suspends Dealings in Dashan Education (9986.HK) Shares over Significant Overstatement of Corporate Bank Balances

   
   

Regulatory Updates

1. FSTB and SFC conclude consultations on virtual asset dealer and custodian regimes

The Financial Services and the Treasury Bureau (“FSTB”) and the SFC published two consultation conclusions on legislative proposals to regulate virtual asset (VA) dealing and custodian service providers in Hong Kong; and also proceed for further consultation on new regimes to cover VA advisory and management services providers adopting the familiar philosophy of “same business, same risks, same rules” principle, these new regimes are formulated on the model base of similarities with the securities market.

For VA dealers, the regime will be aligned closely with that for Type 1 (dealing in securities) regulated activity, some key takeaways from the consultation conclusions are as follows:

• Scope and Coverage: still adhering to the principle of“same business, same risks, same rules”;

• Regulatory Requirement: SFC-licensed VATPs are permitted to integrate with intra-group liquidity via a shared order book while still upholding an appropriate balance between investor protection and market development;

• Transitional Period: no plan for any deeming arrangement to existing VA dealing service providers;

• Expedited Licensing Process: SFC-licensed VATPs and licensed corporations currently providing VA dealing services will be subject to an expedited approval process;

• Prohibition: any person is prohibited from actively marketing its VA dealing services, whether in Hong Kong or elsewhere, to the public of Hong Kong, unless that person is licensed by with the SFC;

• Powers of Regulatory Authorities: the SFC and the HKMA would be provided with the proposed powers.

For VA custodians, the new regime will focus on managing risks related to safekeeping private keys of client VAs in Hong Kong, to secure client assets and protect investors. Key takeaways from the consultation conclusions are as follows:

• Scope and Coverage: target entities safekeeping private keys which represent the core risk area in VA custody;

• Activities Allowed: safekeeping of VAs and provision of staking services;

• Financial Resource Requirements: subject to the similar financial requirements as an LC carrying on Type 13 regulated activity of providing depositary services;

• Transitional Arrangement: no plan for any deeming arrangement to existing VA custodian service providers;

• Prohibition: any person is prohibited from actively marketing VA custodian services, whether in Hong Kong or elsewhere, to the public of Hong Kong, unless the person is licensed by with the SFC;

• Powers of the Regulatory Authorities: the SFC and the HKMA would be provided with the proposed powers.

SIGNIFICANCE:

As Julia Leung, CEO of the SFC, said: “The significant progress in our VA regulatory framework ensures Hong Kong remains at the global forefront of digital asset market developments by fostering a trusted, competitive and sustainable ecosystem.” Meanwhile, Mr. Christopher Hui, the Secretary for Financial Services and the Treasury, said: “The proposed licensing regimes strike a prudent balance among fostering market development, managing risks and protecting investors.”

Market News

2. A quarter of connecting, innovating and diversifying Hong Kong markets: SFC Report

In the Jul-Sep 2025 Quarterly Report, it showed Hong Kong’s capital markets continued to deepen connectivity with Mainland and overseas markets, while driving advanced financial innovation and diversification. Some key takeaways of the Report on the financial areas are as follows:

• The SFC signed six MOUs in 2025 (three in the quarter) with overseas and Mainland markets to strengthen global asset management ties and reinforce Hong Kong’s super‑connector role.​

• Swap Connect, with its product expansion, recorded a 56% year-on-year (“YoY”) increase in trading volume as of November 2025, with aggregate transactions exceeding RMB9.3 trillion since its 2023 launch.

• The SFC collaborating with the HKSAR Government to finalize two new virtual asset (“VA”) regulatory regimes, namely , in dealing and custodian areas.

• VA spot ETFs authorized by the SFC reached $5.47 billion in market cap (+33% YoY) increasing to 11 ETFs as of end‑November; tokenized retail money market fund hit $5.48 billion AUM (+557% since the first launch this year) with eight funds in total.

• To support Hong Kong as an offshore renminbi and fixed‑income hub, the SFC and HKMA issued a RMB fixed income and currency roadmap in September and are preparing a detailed workplan for implementing the roadmap initiatives.

• The 24 IPOs in the quarter raised over $70 billion, more than 70% higher YoY, keeping Hong Kong among global leaders by IPO funds raised.

• Hong Kong‑domiciled funds recorded net inflows of $46.9 billion; their AUM grew 35.9% YoY to $2.27 trillion as of September, while SFC‑authorized ETFs’ market capitalization rose 31.8% YoY to $653.5 billion, accounting for 13% of daily turnover. 

• 2,799 new SFO license applications were filed in the period (+12% YoY); SFC‑licensed corporations and individuals increased to 3,379 and 46,457 respectively (+2.7% and +3.6% YoY). 

• The SFC and HKMA issued a joint statement highlighting the development of the stablecoin regime. 

On the regulatory landscape, we can take a look at the table below relating breaches noted during the SFC on-site inspections.

It is obvious that there was an increasing trend in deficiencies found in asset management regulatory regime in 2025 as contrast to the other categories where the figures were decreasing.

SIGNIFICANCE:

As Julia Leung, CEO of the SFC, said: “Our capital markets delivered another quarter of steady and diversified growth despite global headwinds and volatility.”

On the regulatory side, the acute increase in breaches of FMCC signalled the need to have more comprehensive guidelines and implementable measures to safeguard compliance from market participants.

Enforcement News - Intermediary

3. SFC Suspends Loretta LEE Si Kar for Three Months and Two Weeks Over Neglect of Duties in Safeguarding Client Assets at Tung Tai Securities

On 3 December 2025, the SFC announced the suspension of Ms Loretta LEE Si Kar (“LEE”), a responsible officer (“RO”), manager-in-charge (“MIC”), and director of Tung Tai Securities Company Limited (“Tung Tai”), for three months and two weeks, effective from 1 December 2025 to 14 March 2026 (see Statement of Disciplinary Action)

Case Details

This action stems from LEE's neglect of her supervisory duties, which contributed to Tung Tai's failures in handling unauthorized instructions from a bogus email, leading to the sale of client securities and improper transfers totaling US$3,301,740 to undesignated overseas accounts. Despite red flags such as rejected telegraphic transfers (“TTs”) and inconsistent beneficiary details, Tung Tai processed the transactions without client verification, breaching requirements to safeguard assets and maintain effective internal controls against theft or fraud.

Enforcement ActFollowing the incident, Tung Tai compensated the affected client, implemented remedial measures, and engaged independent reviewers to strengthen procedures. The SFC factored in LEE's cooperation, clean record, and the seriousness of the lapses when determining the sanction, after previously reprimanding and fining Tung Tai HK$900,000 for related violations (see the SFC’s press release dated 13 November 2025).

For more details of the background, please refer to ComplianceOne Newsletter (Nov) - Topic 6

SIGNIFICANCE:

This disciplinary measure reinforces the SFC's emphasis on senior management's responsibility to uphold robust internal controls and vigilance against fraud in securities firms. It serves as a reminder for financial intermediaries, including those in related sectors, to prioritize client asset protection through proactive verification and risk management, as lapses can result in significant financial losses, regulatory penalties, and reputational harm. The case may prompt firms to review email authentication protocols and TT processes to mitigate similar cyber-enabled threats.

4. SFC Reprimands and Fines EFG Bank AG $10.85 Million for Regulatory Breaches and Internal Control Failures

On 11 December 2025, the SFC reprimanded and fined EFG Bank AG (“EFG”) $10.85 million for failures in product due diligence, record-keeping, and late reporting during the period from January 2015 to December 2020 (the “Relevant Period”). The SFC’s action followed an investigation triggered by a self-report from EFG and findings referred by the Hong Kong Monetary Authority (“HKMA”).

Case Details

EFG, registered to conduct regulated activities including dealing in securities, advising on securities, and asset management under the Securities and Futures Ordinance, failed to adequately assess special features of 322 bonds during product due diligence. It also neglected to update internal policies promptly in line with regulatory changes and did not provide customers with sufficient information or warning statements for certain complex products prior to transactions.

Additionally, EFG did not maintain product due diligence records for 141 bonds and delayed reporting its suspected failures to the SFC, despite identifying them in July 2020. These breaches contravened the Code of Conduct for Persons Licensed by or Registered with the SFC and the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the SFC.

Enforcement Act

In determining the sanctions, the SFC considered EFG’s remedial actions to strengthen its product due diligence framework, its cooperation with the HKMA and SFC investigations, and its commitment to implement Enhanced Complaint Handling Procedures (“ECHP”). Under the ECHP, EFG will review complaints from customers who acquired any of the 351 affected products during the Relevant Period, ensuring fair resolution. An impact assessment by EFG indicated potential failures in considering special features for these 351 products.

For more details of the background, please refer to Statement of Disciplinary Action (appended with a list of the 351 products) 

SIGNIFICANCE:

This enforcement action highlights the SFC’s emphasis on robust internal controls, timely compliance with evolving regulations, and proactive self-reporting in the financial sector. For institutions like EFG, which intersect with banking, securities, and potentially insurance-linked activities, such failures can erode investor trust and expose clients to undue risks. The case serves as a reminder for all regulated entities to prioritize comprehensive due diligence, accurate record-keeping, and swift disclosure of issues to maintain market integrity and avoid severe penalties. The implementation of ECHP demonstrates a balanced approach, allowing for remediation while reinforcing accountability.

Enforcement News - LISTCO

5. SFC Convicts and Sentences Former Vice President of Computershare to Imprisonment and Fine for Insider Dealing

SFC’s press release dated 4 December 2025 & 18 December 2025.

The SFC prosecuted Mr. CHOI Chun Wai (“CHOI”), former Vice President of Computershare Hong Kong Investor Services Limited (“Computershare”), a global provider of share registration and investor services, for insider dealing in the shares of ENM Holdings Limited (“ENM”) (128.HK), listed on the Main Board of the Stock Exchange of Hong Kong Limited since 1972. Computershare was engaged by ENM to despatch and collect proxy forms, and to act as the scrutineer for the voting process at a court meeting related to ENM's proposed privatisation. CHOI, while employed as a vice president of Corporate Services, was involved in coordinating and monitoring the voting process. He accessed inside information indicating the privatisation would fail and sold his shares ahead of the public announcement, avoiding a significant financial loss.

Case Details

Court Order

On 4 December 2025, the Eastern Magistrates’ Courts convicted CHOI of insider dealing following a prosecution by the SFC. CHOI pleaded guilty.

The Eastern Magistrates’ Courts then sentenced CHOI to two months of imprisonment on 18 December 2025. He was ordered to pay a fine of $289,500 (equivalent to the losses avoided) and the SFC's investigation costs of $120,407. The Court noted that although CHOI showed remorse, insider dealing is a serious offense warranting an immediate custodial sentence.

SIGNIFICANCE:

The SFC’s Executive Director of Enforcement, Mr. Michael DUIGNAN, stated: “The conviction underscores the SFC’s commitment to tackle insider dealing and enhance the integrity of Hong Kong’s financial markets. The immediate jail sentence by the Court serves as a strong deterrent. The misuse of non-public information for personal gain, particularly market professionals in a position of trust, is unacceptable and will have serious consequences. The SFC will continue to take robust enforcement action to protect investors and uphold a level playing field for all market participants.”

6. SFC Obtains Order to Freeze $101 Million Belonging to Suspected Shadow Director in Corporate Misconduct Case Involving Teamway (1239.HK)

On 16 December 2025, the SFC obtained a court order from the Court of First Instance to freeze more than $101 million in cash held in the personal bank account of Mr NG Kwok Fai (“NG”), a suspected shadow director of Teamway International Group Holdings Limited (1239.HK) (“Teamway”). This action was taken by consent between the SFC and NG in ongoing legal proceedings under section 214 of the SFO, stemming from allegations of corporate misconduct. The freeze follows NG and others agreeing to pay $192 million in compensation to independent public shareholders of the delisted Combest Holdings Limited (“Combest”) for related misconduct.

Case Details

The SFC's investigation revealed that NG and Mr YANG Zhihui (“YANG”) allegedly gained control of Teamway and acted as shadow directors, transforming it into a "listed shell" for injecting new businesses while prejudicing the company's interests through a series of transactions.

The SFC claims that the below individuals breached their fiduciary duties by approving these transactions or allowing NG and/or YANG to dominate company affairs:

Additionally, the former company secretary, Ms CHOI Yee Man (“CHOI”), is accused of negligence or recklessness in her duties.

This case spans several years, involving interconnected corporate actions and related proceedings. Below is a timeline of key events:

Enforcement Act

The SFC is seeking compensation orders totaling $532 million against NG, YANG, and the 10 former directors for losses incurred by Teamway and its subsidiaries, along with disqualification orders against them and CHOI from serving as directors or managing any listed or unlisted corporation in Hong Kong. The asset freeze against NG remains in effect until the proceedings are resolved or further court order.

SIGNIFICANCE:

This enforcement action highlights the SFC's commitment to combating corporate misconduct in listed entities, particularly where shadow directors exploit control to prejudice company and shareholder interests. By freezing assets and seeking substantial compensation and disqualifications, it underscores the importance of fiduciary duties, transparency, and accountability in Hong Kong's financial markets. Company with listed affiliations should review governance practices to mitigate similar risks, as such cases can erode investor confidence and trigger broader regulatory scrutiny across financial sectors.

7. SFC Secures Conviction and Eight-Month Prison Sentence in False Trading Prosecution Involving China All Access Shares

On 4 December 2025, the Shatin Magistrates’ Courts convicted Ms WONG Yuk Lan (“WONG”), Administration Controller of China All Access (Holdings) Limited (former stock code: 633.HK) (“China All Access”), for false trading in the company’s shares, following a prosecution initiated by the SFC.

Case Details

The case stemmed from WONG’s actions as the “Spouse” of Mr Chan Yuen Ming, the company’s Chairman, who held a beneficial interest in 381,400,000 China All Access shares through a securities margin account under Creative Sector Limited, a company he wholly owned and controlled.

Between 29 and 31 December 2014, WONG placed a series of bid orders for China All Access shares via her personal securities account. These orders were executed in the final minutes before market close and at prices above prevailing market levels. The court determined that WONG had no genuine intent to purchase the shares but aimed to create a false or misleading appearance of market demand to alleviate margin call pressures on Creative’s account.

Court Order

This offense violates section 295 of the SFO, which prohibits actions intended to create a false or misleading appearance regarding the market for, or price of, securities. Magistrate Mr Jeffrey SZE Cho Yiu emphasized during sentencing that WONG’s misconduct harmed market integrity by fabricating an illusion of active trading.

WONG was subsequently sentenced to eight months in prison on 17 December 2025, and ordered to pay the SFC’s investigation costs.

SIGNIFICANCE:

This enforcement action underscores the SFC’s dedication to preserving market integrity and deterring manipulative practices that undermine investor confidence in Hong Kong’s financial markets. By securing a conviction and prison sentence for false trading, it highlights the severe consequences of creating artificial market appearances to evade financial pressures, such as margin calls. Financial professionals and firms should strengthen internal controls and compliance measures to prevent similar misconduct, as such cases can lead to reputational damage, regulatory penalties, and broader scrutiny across interconnected sectors.

8.SFC Suspends Dealings in Dashan Education (9986.HK) Shares over Significant Overstatement of Corporate Bank Balances

On 3 December 2025, the SFC directed The Stock Exchange of Hong Kong Limited (“Stock Exchange”) to suspend dealings in the shares of Dashan Education Holdings Limited (9986.HK) (“Dashan”) effective from 9:00 am, under the Securities and Futures (Stock Market Listing) Rules (“SMLR”). This measure aims to maintain a fair and orderly market and protect investors amid an ongoing SFC investigation into suspected financial irregularities.

Case Details

The SFC's inquiry revealed discrepancies in bank statements related to a software development project (April 2022 to November 2023) and a UK company acquisition (September 2022), including omitted circular fund flows and overstatements of bank balances totaling RMB36.4 million as of 30 June 2023 (19% of net asset value) and RMB76.3 million as of 31 December 2023 (55% of net asset value).

These findings suggest the transactions may not have been genuine or at arm's length, with potential fabrication of documents to conceal issues, raising concerns about management integrity, particularly involving executive director Mr. ZHANG Hongjun (“ZHANG”), internal controls, and market disclosures.

Follow-up Action

Dashan has not provided satisfactory explanations, and the SFC suspects the September 2024 trading resumption was based on misleading information. Trading had been halted at Dashan's request since 28 November 2025 pending inside information release.

See HKEX News 28 November 2025 for more information.

SIGNIFICANCE:

This suspension emphasizes the SFC's role in upholding market transparency and investor protection by addressing potential financial misrepresentations in listed companies. It highlights risks associated with overstated assets, inadequate internal controls, and management accountability, which could impact stakeholder confidence and prompt enhanced due diligence for financial intermediaries dealing with similar entities.

As the investigation continues, it may lead to further regulatory actions, underscoring the need for robust compliance frameworks in Hong Kong's capital markets.

[End of ComplianceOne Newsletter – December 2025]

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