Section 183 notice: your right to silence may be put on hold when the SFC calls

28May2020

Right to silence is a fundamental legal right that has been recognized in Hong Kong as well as in many of the world’s legal systems.  However, such a right of an individual is not guaranteed in all circumstances and it has often become a trap for the unwary.

In this article, we will briefly introduce the investigative power vested to the Securities and Futures Commission (the “SFC”) to compel persons to provide answers in an interview.  The failure to comply with the requirement and/or to provide misleading answers amounts to a separate criminal offence.

Investigation conducted by the Securities and Futures Commission

Pursuant to section 182 of the Securities and Futures Ordinance, Cap. 571 (the “Ordinance”), the SFC may investigate, in brief, any matter relating to (i) any offences under the Ordinance; (ii) defalcation, fraud or misconduct in connection with dealing in or managing investment; (iii) market misconduct; (iv) breach of a disclosure requirement; and (v) any dealing in investment which is not in the public interest.

When the SFC decides to conduct an investigation, it is empowered by section 183 of the Ordinance to, by way of a written notice, require a person under investigation, or any person believed to have any relevant record or document or information to attend an interview at a time and place specified by the SFC to answer questions relating to the matter.  This written notice has often been referred to as a “section 183 notice”.

Obligations arise when you receive a “section 183 notice”

First and foremost, a recipient of a section 183 notice should understand that there is a legal duty to attend an interview as specified on the notice.  By virtue of section 184 of the Ordinance, failure to comply with the notice without reasonable excuse is by itself a criminal offence liable maximum to a fine of $200,000 and 1-year imprisonment.

The notice would contain particulars of the suspected wrongdoing(s).  The recipient should read and understand the allegation contained.  It should also be noted that the recipient is prohibited to discuss the matter with any third party and prudent steps should be taken to consult a competent lawyer for advice regarding his rights and obligations forthwith.  

There is a duty of confidentiality that the recipient is to preserve the secrecy of the investigation under section 378 of the Ordinance.  The breach of this secrecy provision is, except for communicating the matter to a lawyer for the purpose of obtaining legal advice, a criminal offence punishable by a maximum fine of $1,000,000 and 2-years imprisonment.

The SFC interview and differences from interviews with other law enforcement authorities

The SFC interview is fundamentally different from an interview with other law enforcement agencies such as the police, immigration or the customs. 

There is a strict duty to produce records or documents as requested and to answer all the questions raised by the SFC.  As provided under section 183, the SFC by having substantial powers to require a person:

  • To produce to the investigator, within the time and at the place the investigator reasonably requires in writing, any record or document specified by the investigator which is, or may be, relevant to the investigation and which is in his possession;
     
  • To give the investigator an explanation or further particulars in respect of any record or document produced;
     
  • attend before the investigator at the time and place the investigator reasonably requires in writing, and answer any question relating to the matters under investigation that the investigator may raise with him; and
     
  • give the investigator all assistance in connection with the investigation which he is reasonably able to give, including responding to any written question raised by the investigator.

The investigative power vested to the SFC is substantial.  However, persons who are compelled to answer questions at the interview may safeguard to prevent the content of the answers being used in subsequent criminal proceedings against them.  During the course of providing answers at the interview, if the person considers that the answer he or she provides might be incriminating, he or she can make a “qualification” before providing the answers.  When a “qualification” is made, save for a number of limited exceptions, the content of the “qualified” answers cannot be admitted as evidence in subsequent criminal proceedings.  It should however be noted that the effect of such “qualification” cannot be extended to disciplinary or civil and administrative proceedings.   

It is strongly advisable that any person who receives a section 183 notice to seek immediate legal advice and to have a competent lawyer to accompany at the interview.  As the person would be required to provide answers that are highly likely to be incriminating, having the accompany of a lawyer, one could ensure having “on-the-spot” legal advice and that the “qualifications” be appropriately made before providing any answers to the SFC.

Karl Wong

If you need advice in respect of the above matters, please contact Philip Swainston, Consultant at +852 9466 1700 or Karl Wong at +852 2573 5000.

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.