The Securities and Futures Ordinance (SFO) sets out the principal regulatory objectives of the Securities and Futures Commission (SFC). Statement I is a core objective, focusing on market quality and integrity. Statement II highlights the SFC’s crucial role in investor protection. Statement IV describes the SFC’s function in maintaining market discipline and reducing misconduct, which contributes to reducing systemic risk. Statement III, however, describes a primary function of the Hong Kong Monetary Authority (HKMA), which is responsible for maintaining the stability of the banking and monetary systems. It is essential for candidates to distinguish between the roles of the SFC and the HKMA. Therefore, statements I, II and IV are correct.

According to the Securities and Futures (Financial Resources) Rules (FRR), a licensed corporation must maintain liquid capital that is not less than its required liquid capital at all times. For a corporation licensed for Type 3 regulated activity (leveraged foreign exchange trading), the required liquid capital is HK$3,000,000. The correct answer is that if a licensed corporation’s liquid capital falls below its required amount, it must immediately notify the Securities and Futures Commission (SFC) in writing of this fact on the same day the deficit occurs. This is a critical and time-sensitive obligation to ensure the SFC is aware of the firm’s potential financial instability. While ceasing business might be a subsequent consequence if the situation is not rectified, it is not the primary and immediate obligation stipulated by the FRR. Similarly, while a capital injection plan will be necessary, the rules do not provide a grace period of several business days before the initial notification is required. Reporting the deficit in the next scheduled financial return is incorrect as it fails to meet the immediacy required for such a significant breach.

The correct answer is that the Market Misconduct Tribunal (MMT) is the body specifically empowered to handle these proceedings. Under the Securities and Futures Ordinance (SFO), the Financial Secretary can institute proceedings before the MMT following an SFC investigation into suspected market misconduct. The MMT is a civil tribunal designed to hear such cases and, if misconduct is found, impose a range of sanctions such as ordering the disgorgement of profits, disqualifying a person from being a director of a corporation, or issuing ‘cease and desist’ and ‘cold shoulder’ orders. The purpose of the MMT is to protect the integrity of Hong Kong’s financial markets through a civil process. The Securities and Futures Appeals Tribunal (SFAT) is incorrect because its primary function is to review and hear appeals against regulatory decisions made by the SFC or the HKMA, such as those related to licensing or registration, not to conduct initial hearings on market misconduct. The Leveraged Foreign Exchange Trading Arbitration Panel is incorrect as it is established to resolve monetary disputes between licensed leveraged foreign exchange traders and their clients through arbitration, not to adjudicate on market-wide misconduct. The High Court, for criminal prosecution, is incorrect in this context because the question refers to the body that conducts proceedings for civil sanctions, which is the MMT’s domain. While serious market misconduct can also be subject to parallel criminal prosecution in the courts, the MMT is the specific civil venue for the actions described.

This question assesses the candidate’s understanding of the distinct roles of various regulatory and dispute resolution bodies under the Securities and Futures Ordinance (SFO).

Statement I is incorrect. The Securities and Futures Appeals Tribunal (SFAT) is an independent statutory body that reviews specific regulatory decisions made by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). It does not hear civil claims for damages from clients against licensed corporations; such claims are typically pursued through the courts.

Statement II is correct. The Leveraged Foreign Exchange Trading Arbitration Panel was established under the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules. It provides an independent and informal forum for resolving monetary disputes between licensed corporations and their clients concerning leveraged foreign exchange trading, provided the claim is based on the client agreement and falls within the prescribed limits.

Statement III is correct. The Market Misconduct Tribunal (MMT) is an independent body that hears cases of market misconduct referred to it by the Financial Secretary. If the MMT finds that market misconduct has occurred, it has the power to impose a range of sanctions and orders. This includes a ‘disgorgement order’ under section 259 of the SFO, which requires the person to pay an amount equivalent to the profit gained or loss avoided as a result of the misconduct. This can be used to provide restitution to affected parties.

Statement IV is incorrect. While the SFC investigates complaints and can take disciplinary action against a licensed corporation (such as imposing fines or suspending its license), it does not have the direct power to order the firm to pay financial compensation or restitution to an individual client. The SFC would refer the matter to the MMT or advise the client to seek civil remedies through the courts or arbitration. Therefore, statements II and III are correct.

This question assesses the understanding of the distinct roles of various tribunals and panels within Hong Kong’s financial regulatory framework. Statement I is correct because the Leveraged Foreign Exchange Trading Arbitration Panel, established under the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules, is specifically designed to resolve monetary disputes between licensed corporations and their clients in a cost-effective and timely manner. Statement III is also correct. The Market Misconduct Tribunal (MMT) is the independent body responsible for hearing and determining cases of market misconduct, such as insider dealing, as defined under the Securities and Futures Ordinance (SFO), following a referral from the Financial Secretary. Statement II is incorrect; the Securities and Futures Appeals Tribunal (SFAT) reviews regulatory decisions made by the SFC (e.g., licensing or disciplinary actions), it does not adjudicate civil monetary claims between a client and a licensee. Statement IV is incorrect; while the SFC can take disciplinary action against a licensed corporation for misconduct, it does not have the power to order compensation for a client’s investment losses. The client must seek such remedies through arbitration or civil court proceedings. Therefore, statements I and III are correct.

Under the Securities and Futures Ordinance (SFO), the Securities and Futures Commission (SFC) is responsible for investigating suspected market misconduct. If the SFC believes there is sufficient evidence, it can institute proceedings before the Market Misconduct Tribunal (MMT). The MMT is an independent body, chaired by a judge, that conducts formal hearings to determine whether market misconduct has taken place. This confirms that the SFC acts as the prosecutor, not the judge, in these civil proceedings, making statement III incorrect. Statement I is correct as it accurately describes the SFC’s role in initiating MMT proceedings. If the MMT finds that market misconduct has occurred, it has a range of orders it can impose, including disqualifying a person from being a director of a listed corporation or from taking part in its management for a specified period. This makes statement II correct. The SFO provides for parallel civil (MMT) and criminal regimes. A person will not be subject to both MMT proceedings and criminal prosecution for the same conduct due to the principle against double jeopardy. The decision on whether to pursue the civil or criminal route is made before proceedings commence. Therefore, statements I and II are correct.

According to the Securities and Futures (Financial Resources) Rules, if a licensed corporation becomes aware that it does not have the required liquid capital, it must notify the Securities and Futures Commission (SFC) in writing of this fact immediately. This is a critical and non-negotiable first step. The correct answer is that the corporation is obligated to inform the SFC in writing without delay. While ceasing business operations might be a subsequent step or a directive from the SFC, it is not the prescribed initial action. Similarly, while the corporation must take steps to rectify the deficit, there is no specific rule mandating a capital injection within one business day as the primary response; the immediate duty is to report. Submitting a formal recovery plan is also a likely follow-up action required by the SFC, but it comes after the initial, immediate notification.

The correct answer is that the Market Misconduct Tribunal (MMT) is the body empowered to hear the case. Under the Securities and Futures Ordinance (SFO), the MMT is an independent tribunal established to handle civil proceedings concerning suspected market misconduct. Its primary function is to determine whether misconduct has occurred and, if so, to impose civil sanctions such as disgorgement of profits, disqualification orders, or ‘cold shoulder’ orders. The Securities and Futures Appeals Tribunal (SFAT) is incorrect because its role is to review and hear appeals against specific regulatory decisions made by the SFC, such as those related to licensing or registration, not to conduct initial hearings on market misconduct. The Leveraged Foreign Exchange Trading Arbitration Panel is incorrect as it is established to resolve monetary disputes between a licensed person and their client through arbitration, not to adjudicate on regulatory enforcement actions initiated by the SFC. The High Court of Hong Kong is incorrect in this context because while it has jurisdiction over criminal prosecutions for market misconduct, the MMT is the designated body for civil proceedings, which is what the SFC has initiated in this scenario.

The correct answer is that the licensed corporation must notify the SFC in writing of this event within one business day. According to the Securities and Futures (Financial Resources) Rules, a licensed corporation is required to notify the SFC in writing within one business day if its liquid capital falls below 120% of its required liquid capital. This is an early warning mechanism that allows the SFC to be aware of potential financial instability before an actual breach occurs. Notifying the SFC only when liquid capital falls below the 100% mark is incorrect; this would constitute a breach of the required liquid capital, a more serious event which also requires immediate notification, but the 120% level is the specific trigger for the initial notification. Ceasing all trading activities immediately is an extreme measure that is not automatically required at the 120% threshold, although it might become necessary if the situation deteriorates. Submitting a comprehensive financial improvement plan within five business days is also incorrect; while the SFC may request such a plan after being notified, the primary and immediate obligation is the notification itself within the one-day timeframe.

The Securities and Futures Appeals Tribunal (SFAT) is an independent body established under the Securities and Futures Ordinance (SFO) to review certain decisions made by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). A decision by the SFC to suspend a license is a ‘specified decision’ that can be reviewed by the SFAT. Therefore, statement I is correct. Upon review, the SFAT has the power to confirm, vary, or set aside the decision under review, which means it can uphold the SFC’s action, change it, or cancel it entirely. Thus, statement III is also correct. The Market Misconduct Tribunal (MMT), on the other hand, conducts civil proceedings into identified market misconduct. While it can impose various civil sanctions such as disgorgement orders, disqualification orders, and fines, it does not have the jurisdiction to impose criminal sanctions like imprisonment. Criminal prosecutions are handled by the courts. Therefore, statement II is incorrect. The MMT’s jurisdiction is specifically for cases of ‘market misconduct’ as defined in the SFO, such as insider dealing or market manipulation. Supervisory failures, while serious regulatory breaches, are typically addressed through the SFC’s own disciplinary process and would not be referred to the MMT by the Financial Secretary. Therefore, statements I and III are correct.

The correct answer is that the SFC would initiate proceedings before the Market Misconduct Tribunal (MMT). The Securities and Futures Ordinance (SFO) establishes the MMT specifically to handle civil proceedings concerning suspected market misconduct. When the SFC completes an investigation and believes there is sufficient evidence of market misconduct, it can institute proceedings before the MMT. The MMT’s role is to determine whether misconduct has occurred and, if so, to impose various civil sanctions, such as disgorgement of profits, disqualification of directors, or issuing ‘cease and desist’ or ‘cold shoulder’ orders. Commencing criminal prosecution in the courts is an alternative route for the SFC, but the MMT is the dedicated tribunal for civil actions. The Leveraged Foreign Exchange Trading Arbitration Panel is incorrect as its function is to resolve monetary disputes between clients and licensed corporations, not to adjudicate on regulatory matters like market misconduct. The SFC imposing a significant fine and revoking the license without a hearing before a tribunal or court is also incorrect; while the SFC has disciplinary powers, for a serious matter like market misconduct, due process requires proceedings before the MMT or a criminal court.

According to the Securities and Futures (Financial Resources) Rules (FRR), if a licensed corporation’s liquid capital falls below its required liquid capital, it must notify the Securities and Futures Commission (SFC) in writing of this fact as soon as reasonably practicable. This immediate notification is a critical regulatory obligation designed to alert the SFC to potential financial instability at the firm, allowing the regulator to take timely action to protect the interests of clients and the integrity of the market. The correct answer is that the licensed corporation must notify the SFC in writing of the deficit as soon as reasonably practicable. While rectifying the deficit by injecting capital is essential, the rules prioritize immediate notification to the regulator over taking corrective action first. Ceasing business activities might be a subsequent consequence or a directive from the SFC, but it is not the prescribed initial step. Reporting the deficit in the next monthly financial return is incorrect as it fails to meet the requirement for immediate notification of such a serious breach.

Under the Securities and Futures Ordinance (SFO), when the SFC believes market misconduct has occurred, it can refer the matter to the Financial Secretary. Statement II is correct because the Financial Secretary has the authority to institute proceedings before the Market Misconduct Tribunal (MMT). The SFC does not directly initiate MMT proceedings itself. Statement III is also correct; MMT proceedings are civil in nature, not criminal. Consequently, the standard of proof is the balance of probabilities, which is lower than the ‘beyond a reasonable doubt’ standard used in criminal cases. Statement I is incorrect in the context of MMT proceedings; while the SFC has its own disciplinary powers for misconduct, for matters referred to the MMT, the tribunal conducts the proceedings and makes findings. Statement IV is incorrect because while the MMT can make various orders (such as disgorgement of profits, disqualification of directors, or issuing ‘cease and desist’ orders), it does not have the power to directly revoke an SFC license. The MMT’s findings can, however, form the basis for the SFC to take separate disciplinary action, which may include license revocation. Therefore, statements II and III are correct.

The correct answer is the Hong Kong Monetary Authority (HKMA). In Hong Kong’s regulatory framework, Authorized Institutions (i.e., banks) that conduct regulated activities under the Securities and Futures Ordinance (SFO) are known as Registered Institutions (RIs). While the Securities and Futures Commission (SFC) sets the overall regulatory standards and codes of conduct for all entities conducting regulated activities, the HKMA serves as the front-line supervisor for RIs. This means the HKMA is primarily responsible for the day-to-day supervision of an RI’s conduct in its regulated activities, including leveraged foreign exchange trading, to ensure compliance with the requirements of the SFO and associated codes. The SFC, while being the statutory regulator, works in close coordination with the HKMA but does not handle the primary day-to-day supervision of RIs. The Market Misconduct Tribunal is a disciplinary body that hears cases of market misconduct referred by the Financial Secretary; it is not a supervisory authority. The Securities and Futures Appeals Tribunal is an independent body that reviews certain decisions made by the SFC or the HKMA; it does not have a supervisory function.

Under the Securities and Futures (Financial Resources) Rules (FRR), a corporation licensed for Type 3 regulated activity (Leveraged Foreign Exchange Trading) is required to maintain a minimum paid-up share capital of HK$5 million. Therefore, statement I is correct. Statement II is also correct, as the FRR mandates that a licensed corporation must notify the SFC in writing within one business day if its liquid capital falls below 120% of its required liquid capital. Statement III is incorrect; the frequency of submitting FRR returns depends on whether the corporation holds client assets. If it does not, it may submit returns on a semi-annual basis, not necessarily monthly. Statement IV is incorrect because while an approved subordinated loan can be included in the calculation of liquid capital, it cannot be used to satisfy the minimum paid-up share capital requirement, which must be met by actual share capital. Therefore, statements I and II are correct.

Under the Securities and Futures Ordinance (SFO), the Market Misconduct Tribunal (MMT) conducts civil proceedings to determine whether market misconduct has taken place. Statement I is correct because MMT proceedings are explicitly civil, not criminal. The standard of proof is the civil standard of ‘on the balance of probabilities’. Statement II is correct as the SFC is the body responsible for investigating potential market misconduct and has the power to institute proceedings before the MMT. Statement III is also correct; the SFO grants the MMT the power to make a range of orders if misconduct is found, including disqualifying a person from being a director of a listed corporation. Statement IV is incorrect because the MMT, being a civil tribunal, cannot impose criminal sanctions such as imprisonment. Criminal prosecution for market misconduct is handled separately by the criminal courts, initiated by the Department of Justice. Therefore, statements I, II and III are correct.

According to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism, when a licensed corporation or its staff knows or suspects that any property represents proceeds of an indictable offence, they have a legal obligation to file a Suspicious Transaction Report (STR) with the Joint Financial Intelligence Unit (JFIU) as soon as it is reasonably practicable. This is the primary and most critical step. Informing the client that a report is being filed constitutes ‘tipping off’, which is a serious criminal offence under the AMLO. While reporting significant compliance breaches to the SFC is a general regulatory requirement, the specific channel for reporting suspected money laundering activities is the JFIU. Simply refusing the business without filing an STR fails to discharge the legal obligation to report the suspicion to the relevant authorities.

The correct answer is that the SFC would institute proceedings before the Market Misconduct Tribunal (MMT). Under the Securities and Futures Ordinance (SFO), the MMT is a specialized, independent body established to handle civil proceedings concerning suspected market misconduct. Its purpose is to determine whether misconduct has occurred and to impose sanctions such as disgorgement of profits, disqualification of directors, or ‘cold shoulder’ orders. This is the appropriate civil route for the SFC to take when it has gathered sufficient evidence from an investigation. Referring the case to the Leveraged Foreign Exchange Trading Arbitration Panel is incorrect because this panel is designed to resolve monetary disputes between a licensed corporation and its clients, not to adjudicate on regulatory matters of market misconduct. The SFC imposing a fine and revoking the license without a formal hearing before a tribunal or court would be procedurally improper for a serious allegation of market misconduct; such disciplinary actions typically follow a finding by the MMT or a criminal conviction. Finally, initiating criminal proceedings in the High Court is a possible route, as the SFO provides a dual civil and criminal regime. However, instituting proceedings before the MMT is the specific civil pathway and a very common and direct course of action for the SFC in such cases.

Under the Securities and Futures Ordinance (SFO), the Securities and Futures Commission (SFC) is granted extensive powers to investigate potential misconduct and protect investors. Statement I is correct as the SFC has the power to compel the production of records and documents relevant to an investigation (Sect 183, SFO). Statement II is also correct; the SFC can apply to a magistrate for a warrant to enter and search premises if there is reason to believe relevant records are located there (Sect 191, SFO). Statement IV is correct because the SFC can apply to the Court of First Instance for various orders, including an injunction or an order to freeze assets, to protect the interests of clients or the investing public (Sect 213, SFO). However, Statement III is incorrect. The SFC does not have the power to impose criminal sanctions such as imprisonment. While it can initiate criminal proceedings in the courts or refer matters to the Department of Justice, only a court can impose a prison sentence upon conviction. The SFC’s own disciplinary powers are limited to actions like fines, reprimands, and suspension or revocation of licenses. Therefore, statements I, II and IV are correct.

The Securities and Futures Ordinance (SFO) sets out the principal regulatory objectives of the Securities and Futures Commission (SFC). Statement I is correct as a primary objective is to maintain and promote the fairness, efficiency, competitiveness, transparency, and orderliness of the securities and futures industry. Statement II is also correct, as providing protection for the investing public is a fundamental goal of the SFC. Statement IV is correct; the SFC is tasked with taking steps to minimise crime and misconduct within the industry. However, Statement III describes a core function of the Hong Kong Monetary Authority (HKMA), which is responsible for maintaining the stability and integrity of the monetary and banking systems, not the SFC. The SFC’s focus is on the securities and futures markets. Therefore, statements I, II and IV are correct.

The Securities and Futures Ordinance (SFO) outlines the principal regulatory objectives of the Securities and Futures Commission (SFC). Statement I is correct as it directly reflects the objective to maintain and promote a fair, efficient, competitive, transparent, and orderly market. Statement II is also correct, as a key objective is to offer protection to the investing public. Statement IV is correct, as the SFC is tasked with reducing crime and misconduct within the industry. However, Statement III is incorrect. Setting the base interest rate and managing currency stability are primary functions of the Hong Kong Monetary Authority (HKMA), not the SFC. The SFC’s role is focused on the regulation of the securities and futures markets. Therefore, statements I, II and IV are correct.

The correct answer is that the Responsible Officer must promptly report the suspicious activity to the firm’s Money Laundering Reporting Officer (MLRO) for further assessment. According to the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism, when an employee of a licensed corporation identifies a transaction they know or suspect to be related to money laundering or terrorist financing, they must make an internal report to the MLRO as soon as is reasonably practicable. The MLRO is then responsible for evaluating the suspicion and determining whether a Suspicious Transaction Report (STR) should be filed with the Joint Financial Intelligence Unit (JFIU). Immediately contacting the client to demand a detailed written explanation for the source of funds and trading rationale is incorrect as this could constitute ‘tipping off’, a serious offense which could prejudice an investigation. Executing the client’s trading instructions without delay to fulfill the firm’s duty of best execution is also incorrect because the obligation to prevent financial crime supersedes the duty of execution when there are clear red flags of suspicious activity. Filing a formal complaint directly with the Securities and Futures Commission’s enforcement division is not the correct procedure; the established channel for reporting suspicious transactions is through the MLRO to the JFIU.

The correct answer is that the firm must obtain a specific written authority from the client for leveraged foreign exchange trading, which must be designated to a specific person and approved by the firm’s senior management. The Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission has additional, stringent requirements for licensed persons engaging in leveraged foreign exchange trading due to its high-risk nature. For discretionary accounts, a general clause in a client agreement is insufficient. A separate, explicit written authorization is mandated. This authorization must not only grant discretionary power but also name the specific individual who will be exercising that authority. Furthermore, this arrangement requires the review and explicit approval of the firm’s senior management to ensure proper oversight. One incorrect option suggests merely signing a supplemental risk disclosure statement. While risk disclosure is crucial, it is a separate obligation and does not constitute the legal authority required to operate the account. Another incorrect option mentions a specific experience requirement of five years for the representative. The Code of Conduct requires competence, but it does not prescribe a fixed number of years of experience as a prerequisite for managing a discretionary LFX account; the focus is on the formal authorization process. The final incorrect option involves registering the account with the Hong Kong Monetary Authority. This is incorrect as the SFC is the direct regulator for the conduct of licensed corporations, and its Code of Conduct governs this specific activity without mandating such a registration with the HKMA.

This question tests the specific additional requirements for licensed persons engaging in leveraged foreign exchange (LFE) trading as outlined in Schedule 5 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. Statement I is correct because the Code requires a licensed person to provide a separate risk disclosure statement for LFE trading, distinct from the client agreement, to highlight the unique and high risks involved. Statement II is correct as it is a mandatory step; the firm must obtain a signed acknowledgement from the client confirming they have read and understood this specific risk disclosure statement before the first LFE transaction is effected. This ensures the client is fully aware of the risks. Statement IV is also correct; providing a client agreement that clearly details the basis of charges, interest, and fees is a fundamental requirement to ensure transparency. Statement III is incorrect. While a licensed person must assess a client’s financial situation and ensure suitability, the Code of Conduct does not prescribe a specific minimum net worth (e.g., HK$5 million) for all clients wishing to trade LFE. The assessment is based on the individual client’s circumstances, not a fixed monetary threshold. Therefore, statements I, II and IV are correct.

According to the Securities and Futures (Financial Resources) Rules, a licensed corporation is required to maintain liquid capital that is not less than its required liquid capital. The rules establish an early warning system. The correct answer is that the corporation must notify the Securities and Futures Commission (SFC) in writing of the situation within one business day. This is because the rules stipulate that if a licensed corporation’s liquid capital falls below 120% of its required liquid capital, it triggers an immediate notification requirement to the regulator. The other options are incorrect. Ceasing all trading activities is a more drastic measure required only if the liquid capital falls below 100% of the required amount. Submitting a capital injection plan within five business days is not the immediate required action; the primary obligation is notification. Simply reporting the matter in the next monthly financial return is insufficient as it does not meet the urgency required by the rules for such a breach of the early warning threshold.

Under the Securities and Futures (Financial Resources) Rules, a licensed corporation is required to maintain, at all times, liquid capital that is not less than its required liquid capital. The correct answer is that if a licensed corporation’s liquid capital falls below the required amount, it must immediately notify the Securities and Futures Commission (SFC) in writing of this fact. This notification is a primary and non-negotiable regulatory obligation. While injecting additional capital is the necessary action to resolve the deficit, the duty to inform the regulator is the first and most immediate step. Ceasing business operations might be a prudent risk management decision, but it is not the specific immediate action mandated by the rules; the notification requirement is. Submitting a remediation plan is typically a subsequent step that the SFC may require after being informed of the breach, not the initial obligation.

The Securities and Futures Ordinance (SFO) outlines the regulatory objectives and powers of the Securities and Futures Commission (SFC). Statement I is correct as one of the SFC’s principal regulatory objectives is to provide protection for the investing public. Statement III is also correct, as another key objective is to maintain and promote the fairness, efficiency, competitiveness, transparency, and orderliness of the securities and futures industry. Statement II is correct because the SFO grants the SFC extensive investigative powers, including the power to enter the business premises of a licensed corporation to inspect and make copies of records and documents relevant to an investigation. Statement IV is incorrect. While the SFC can conduct investigations and institute proceedings before the Market Misconduct Tribunal or take disciplinary action, it does not have the power to conduct criminal prosecutions itself. Criminal proceedings under the SFO are prosecuted in the name of the Secretary for Justice, typically following a referral from the SFC. Therefore, statements I, II and III are correct.

Under Part VIII of the Securities and Futures Ordinance (SFO), the SFC is granted extensive powers to conduct investigations. Section 182 of the SFO explicitly allows the SFC to require a person under investigation, or a person believed to possess relevant information, to produce any record or document specified by the investigator. Therefore, statement I is correct. Section 183 of the SFO empowers the SFC to require a person to attend an interview, answer questions, and provide all reasonable assistance. The investigator may also require the person to answer questions on oath. Thus, statement II is correct. While the SFC has significant disciplinary powers, such as imposing fines and revoking licenses, it does not have the authority to impose criminal sanctions like imprisonment. Imprisonment can only be ordered by a court following a criminal conviction. Therefore, statement III is incorrect. Section 213 of the SFO provides the SFC with the ability to apply to the Court of First Instance for a range of remedial orders to protect investors, including orders to freeze assets of a person or corporation, if it appears that certain provisions of the SFO have been contravened. Therefore, statements I, II and IV are correct.

Under the Securities and Futures Ordinance (SFO), the Securities and Futures Commission (SFC) is granted a range of disciplinary and investigative powers to regulate licensed corporations. Statement I is correct as Section 194 of the SFO empowers the SFC to impose a fine not exceeding the greater of HK$10 million or three times the amount of profit gained or loss avoided by the regulated person as a result of the misconduct. Statement II is also correct; under its investigative powers (e.g., Section 180 of the SFO), the SFC can require a person under investigation and related parties to produce records and documents. Statement IV is correct because the SFC’s disciplinary sanctions include the power to publicly or privately reprimand a licensed corporation or a responsible officer (Section 194 of the SFO). However, Statement III is incorrect. While the SFC has the power to prosecute summary offences in a magistrate’s court, it does not have the authority to initiate criminal proceedings for serious, indictable offences directly in the Court of First Instance. Such cases must be referred to the Department of Justice for prosecution. Therefore, statements I, II and IV are correct.

The Securities and Futures Appeals Tribunal (SFAT) is an independent statutory body established under the Securities and Futures Ordinance (SFO) to review certain decisions made by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). Statement I is correct because a core function of the SFAT is to conduct a full merits review of the specified decision. Under Section 217 of the SFO, it has the power to confirm, vary, or set aside the decision under review. Statement III is also correct; an appeal to the SFAT is not open-ended. Section 217(3) of the SFO stipulates that an application for review must be made in writing within 21 days after the date on which the decision was served on the person. Statement II is incorrect because the SFAT is a civil tribunal, not a criminal court. It does not have the jurisdiction to conduct criminal trials or impose criminal sanctions such as imprisonment. Such matters are reserved for the Hong Kong courts. Statement IV is incorrect because a decision made by the SFAT is not necessarily the final legal step. A party to the proceedings who is dissatisfied with the SFAT’s determination may appeal to the Court of Appeal, but only on a point of law, as per Section 219 of the SFO. Therefore, statements I and III are correct.