Hong Kong’s Market Watchdogs Set Enforcement Precedent Over Non-Cooperation in Regulatory Probes

Key Takeaways

• First Joint Action of Its Kind: The SFC and HKEX have, for the first time, sanctioned former directors for failing to cooperate with both regulators’ investigations.
• Directors Named and Barred: Ms Ma Xiaoqiu and Mr Jin Lailin were publicly censured and deemed unfit for any directorship or senior management role at TOMO Holdings or its subsidiaries.
• Obligations Don’t End with Resignation: Under the Listing Rules, directors must cooperate with regulatory inquiries even years after stepping down.
• Zero Tolerance for Non-Cooperation: Both regulators stressed that ignoring investigation requests is serious misconduct with lasting consequences.
• Strengthened Enforcement Partnership: The case underscores the growing collaboration between SFC and HKEX to ensure accountability and uphold market integrity.

Deep Dive

If there’s one thing regulators don’t like, it’s being ignored. And in Hong Kong, if you try to duck the calls of the market watchdogs, they’ll make sure everyone knows.

On August 12, the Securities and Futures Commission (SFC) and the Stock Exchange of Hong Kong Limited (HKEX) announced a joint enforcement action against two former directors of TOMO Holdings Limited. This isn’t just another routine disciplinary notice though, it’s the first time the Exchange has used its powers to sanction ex-directors for refusing to cooperate with investigations by both the SFC and HKEX.

The two directorsm (former executive director and chairlady Ms Ma Xiaoqiu, and former independent non-executive director Mr Jin Lailin) didn’t respond to repeated formal requests for information, even as the SFC investigated potential contraventions under the Securities and Futures Ordinance and HKEX’s Listing Division examined whether they had met their duties under the Listing Rules.

In the regulators’ eyes, that silence was a serious breach of duty. The Listing Rules make it clear that every director of a listed company must cooperate with inquiries, even years after they’ve stepped down. By refusing, Ma and Jin were found unsuitable to hold any directorship or senior management position at TOMO or its subsidiaries, and both were publicly censured.

Christopher Wilson, the SFC’s Executive Director of Enforcement, said, “When directors fail to cooperate with regulatory investigations, they undermine the effectiveness of our oversight and compromise our ability to protect investors… those who seek to avoid accountability cannot simply walk away from their obligations.”

Catherine Yien, who heads HKEX’s Listing Regulation and Enforcement, stressed that cooperation isn’t just a courtesy, it’s the foundation of a fair and orderly market. She warned that the Exchange has “zero tolerance for non-cooperation” and will take action when directors fail to engage with investigations.

For Hong Kong’s governance community, the takeaway is hard to miss. Compliance isn’t just about ticking boxes or surviving your tenure, but about standing behind your actions, even after you’ve moved on. Regulators have long memories, their powers extend beyond resignation letters, and the consequences of ghosting them can be career-ending.

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