Bailey McCann, Opalesque New York: A Hong Kong court has recently acquitted a company and its director on four counts of issuing advertisements to promote a collective investment scheme, including posting relevant information on its website, without authorisation by the Securities and Futures Commission (SFC). Charges were brought as the SFC tends to prohibit the marketing of private funds like hedge funds, however a lack of specific guidance on internet marketing meant that the courts sided with the company.
According to a brief on the issue from law firm Deacons, under the Securities and Futures Ordinance (SFO), private funds are prohibited from issuing a public solicitation for their fund. However, the SFC does allow private funds to market to professional investors, but guidelines about what is permissible marketing to professional investors is unclear.
In this case, the SFC said the parties involved failed to get approval from the regulator before posting the advertisement. The company countered and said the information provided on its website did not include a public solicitation, instead that the information would only be of use to professional investors - the judge agreed. According to a statement from the SFC, they are considering an appeal.
Attorneys for Deacons note that the case could mark a shift of policy in Hong Kong if funds note that the information is specific......................
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