meta_id 3202618

On June 1, 2026, the Securities and Futures Commission (SFC) reprimanded and fined XHK Limited (XHK) $2.5 million for multiple regulatory breaches relating to financial returns preparation, liquid capital maintenance, and client money handling. The SFC's investigation, triggered by XHK's self-reports, identified significant accounting errors in financial returns submitted under the Securities and Futures (Financial Resources) Rules (FRR) between January 2020 and June 2021. These errors resulted in both overstatements and understatements of liquid capital, revealing that XHK's required liquid capital fell into deficit—ranging from $3.6 million to $32.3 million—for four months during this period. The SFC determined that XHK's failures stemmed from inadequate oversight of external service providers responsible for preparing financial returns, combined with staff unfamiliarity with FRR requirements. Additionally, the SFC found that between March and April 2021, XHK transferred approximately $206 million of client money from segregated accounts to overseas brokers' accounts without obtaining written client direction or standing authority, breaching the Securities and Futures (Client Money) Rules (CMR). Between February 2019 and October 2021, XHK also failed to promptly transfer non-client money—including approximately $38 million in commissions and interest—out of segregated accounts within one business day of identifying such funds, contrary to CMR requirements. These failures constituted breaches of the Code of Conduct for Persons Licensed by or Registered with the SFC. In determining sanctions, the SFC considered XHK's remedial measures, absence of client losses, clean disciplinary record, and cooperation with the investigation. XHK holds licences for Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities.