What you should know before attending an SFC interview (Part 1)
Many people are worried when they receive a s.183 notice from the Securities and Futures Commission (“SFC”) to attend an interview.
In one minor respect, it is like an ICAC interview; but in many other respects, it is nothing like it.
In this article, we explain some of the matters you should know before attending such an interview. With the right knowledge about what may lie ahead, you should be able to plan your affairs well in advance in anticipation of whatever enforcement actions may be taken by the SFC.
Powers of the SFC
The SFC has powers under s.183 of the Securities and Futures Ordinance (SFO) to, among other things, require a person to attend an interview.
Recipient of a s.183 interview notice has a legal obligation to attend an interview and to answer questions during the interview. There is no right to refuse to answer any question on the ground that the answer may incriminate. Criminal liability is provided under the SFO for non-compliance with a s.183 notice without reasonable excuse.
Types of interviews
There are 2 types of persons who may be required in a s.183 notice to attend an interview: a person under investigation (PUI) or someone assisting an investigation. The categorization is often stated in the notice. However, it should be noted that any such categorization is not final. A person being asked to assist in an investigation may later become a PUI (and, though far less frequently, vice versa).
If the recipient of a s.183 notice is already the subject of a home or office search before receiving the notice, it is highly likely that he would be categorized as a PUI.
Differences between the SFC and other law enforcement agencies (LEAs)
The SFC’s power to compel someone to attend an interview is a bit similar to that of many LEAs like the ICAC’s. Many people attend ICAC’s interviews because they have been arrested and have no choice but to attend those interviews. Those attending SFC’s interviews also (to some extent) have no choice but to attend the interviews. However, the similarity ends there.
First, anyone arrested by LEAs does not have freedom of movement, while interviewees of the SFC, though generally required to attend an interview and to answer any question put to them, are technically free to stop (or even leave) the interview any time they want, because the SFC has no power to arrest anyone. Of course, in extreme cases, the SFC may prosecute a highly uncooperative interviewee for non-compliance with a s.183 notice, but that is a different story.
Second, while cautioned interviewees of LEAs have the right to remain silent, interviewees of the SFC do not. In return for the abrogation of the right of silence, s.187 of the SFO provides that the answers are not admissible in criminal proceedings if an interviewee makes a claim before any of his answer. While the answers are still admissible in civil and other proceedings, as long as a claim is made, the interviewee can rest assured that any incriminating answer made will not land him in prison. However, anything said in cautioned interviews with other LEAs are admissible in criminal proceedings.
What usually happens before an interview?
In most serious cases, especially cases involving market misconduct under Part XIII and Part XIV of the SFO, the SFC often relies on documents seized from premises searched with search warrants.
While the sequence of enforcement actions in each case varies, since the effectiveness of search operations depends largely on the element of surprise, s.183 interviews often take place after SFC officers have seized relevant documents from search operations and have had sufficient opportunity to go through them. Seized documents sometimes provide evidence in respect of which the SFC would like to ask interviewees, especially PUIs, for explanation or comment.
Summary
In this part, we have examined some of the matters a recipient of an SFC interview notice should know about. We will go into some other matters in later series.
