HKSI Paper 6 General regulatory framework question: looking into repeated pricing errors at Silver Bay Income Fund

HKSI Paper 6General regulatory framework

The SFC is looking into repeated pricing errors at Silver Bay Income Fund, an SFC-authorised fund. Before any finding, the fund's approved person asks in writing for the fund's authorisation to be withdrawn. How may the SFC respond?

A It may refuse if an investigation should first take place in the public interest, after hearing the approved person
B It need not act, as withdrawal takes effect automatically 14 days after the approved person's request
C It may refuse only with the Financial Secretary's prior consent, as refusing a withdrawal is a policy decision
D It must withdraw the authorisation, as a written request from the approved person leaves it with no discretion

Show the answer and explanation

Answer: A. It may refuse if an investigation should first take place in the public interest, after hearing the approved person

Under s.106(2) the SFC must withdraw an authorisation on a written request from the approved person, but s.106(3) lets it refuse where it considers that a matter concerning the scheme should be investigated in the public interest before withdrawal, or that withdrawal would not be in the interest of the investing public. Under s.106(5) it must first give the approved person a reasonable opportunity of being heard, and s.106(6) requires written notice of the decision with reasons. No Financial Secretary consent is needed and withdrawal is never automatic; the 14-day period in s.104(2) is for notifying changes in the approved person's contact details. Source: SFO (Cap. 571) s.104(2), s.106(2), (3), (5), (6) (as at October 2026).

Common mistake

Reading s.106(2) as absolute. The SFC can refuse a requested withdrawal so that a pending investigation can proceed.

Practise more Paper 6 General regulatory framework questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: General regulatory framework for asset management HKSI Paper 6 practice questions & mock exams

Related HKSI Paper 6 questions

Under the Harbour Suites Plan, investors each buy a room in a hotel building. The operator runs the whole building as one hotel; each investor receives the letting income of his own room, so contributions and profits are not pooled. Investors have no day-to-day control. Is the plan a CIS under the SFO?Kowloon Harbour REIT, authorised by the SFC under s.104, owns mainly Hong Kong shopping malls. Its management company and trustee are in Hong Kong. Which of the following statements are CORRECT?Victoria Gate Securities Ltd, licensed for Types 1 and 4, posts on its public website an invitation to subscribe for units in a Cayman hedge fund that the SFC has not authorised. Nothing limits the offer to professional investors or to persons outside Hong Kong. What is its position under Part IV of the SFO?

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practising →

Original study material mapped to the public HKSI Paper 6 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.