Interview with former SFC-Regulator Louie Lee: from Securities to Crypto Regulation and Compliance
Managing Director of Prosynergy Louie Lee joined Hong Kong-based full-service law firm Ravenscroft & Schmierer as part of its ongoing expansion. Louie Lee qualified in 1999 and was with US law firm Sidley Austin before joining the SFC (Securities and Futures Commission) as a regulator. This interview was conducted by Nazahat Riaz, of Ravenscroft & Schmierer’s marketing team.
Nazahat: Nice to meet you, Louie. I would like to start with your earlier journey in your career as a regulator. You worked at the SFC for almost 10 years and were an Associate Director before you left. Why did you leave the SFC?
Louie: After years as a regulator, I decided to widen my horizon and move into the supposed “dark side”, the other side of the fence so to speak, as an in-house legal and compliance. As a regulator, you may not be able to experience the end to end of the financial process and to improve at what you do, you have to better understand what the “other side” has to offer, so moving in-house was logical.
Moving in-house into a bank from the regulator was not easy with a steep learning curve, especially having to learn on the fly a number of issues like deposit-taking, loans, investments, and more. On top of this we were applying for a banking licence at the time when I joined and the bank had no experience dealing with the regulators in Hong Kong or indeed any experience dealing with rules and regulations outside its home jurisdiction. This was exacerbated as the bank in Hong Kong was in its infancy, so resources were limited, and we had to play multiple roles and functions. It was quite a challenge!
Nazahat: How was it joining a financial institution as Head of Legal and Compliance?
Louie: It was tough. I threw myself into the deep end as I joined the bank fresh from being a regulator. The bank itself was also new to the scene in the Hong Kong landscape, so it was like working in a start-up. We had to deal with a lot of issues, both with the regulator in Hong Kong and with the head office and its home regulator. We had to set up its internal controls and compliance frameworks from scratch, drafting various new documents, developing IT systems to assist us in the process and so on. But it was quite enjoyable! Of course, I had a lot of help along the way, and it was good to have someone that I was familiar with in this journey. My colleague from the SFC, Sally Lin, also joined the bank and we were able to work through all these issues together. We made a lot of good friends whilst we were at the bank, the bonds that we created during this journey were strong and we remained good friends with our banking colleagues ever since.
Besides working for a bank, I also worked at a securities brokerage and investment bank. Perhaps this was more my familiar territory as I used to be a corporate finance lawyer at Sidley Austin before I joined the SFC. This was another great experience as we were presented with different challenges as the firm was trying to break out and offer more products and services to its clients and creating a stronger bond with its head office plus expanding overseas to the United States. With its wide product range and services, it was all about how to manage the various regulatory and compliance risks in such an environment, getting the different teams and personnel working in sync, presenting the risks in a clear and concise manner, and working with the front office to balance the need of business promotion and compliance as well as regulatory risk management in various jurisdictions. The experience certainly helped me a lot in understanding how the various businesses operate and how to manage the compliance and regulatory risks across multiple jurisdictions.
“My experience with a securities brokerage and investment bank helped me a lot in understanding how the various businesses operate and how to manage the compliance and regulatory risks across multiple jurisdictions.”
Nazahat: You are a Co-Founder and Managing Director of Prosynergy Consulting Limited. Please tell us more about that.
Louie: Prosynergy is a boutique consulting firm based in Hong Kong serving financial institutions, fintechs and other companies. We possess extensive regulatory and compliance knowledge and insights, fusing in-house experience at securities firms and banks and with the regulator. We pride ourselves in building strong working relationships with our clients, offering innovative solutions that are tailor-made for each client.
It has been great fun setting up the consultancy and running it together with my partner, Sally. We have “teamed” for more than a decade now. It is a very enjoyable journey so far. We stayed true to our ways of operating and were able to really build up our advisory business. We have done licensing of various regulated activities in Hong Kong, both corporate and individual licensing, advising on day-to-day operations of licensed corporations from project-led transactions (e.g. setting up a new business line, gap analysis, compliance reviews, onsite inspection advisory) to ongoing daily advisory of compliance tasks, acting as an extension of our clients’ in-house team.
We also advised IT companies who provide solutions to licensed corporations and recently, we have been advising SOX (Sarbanes-Oxley Act) compliance for certain corporates as well. Perhaps the most interesting projects that we have dealt with so far are the crypto-related companies. We have advised on the licensing requirements and operational processes of companies seeking licences from the SFC, including trading platforms and crypto fund managers, and we also advised non-regulated crypto companies on their internal controls and processes. This is certainly an expanding space as the crypto industry development continues to gather pace and regulators world-wide will be paying more and more attention to such players. To be part of this growing industry is very exciting for us.
Nazahat: You now joined Ravenscroft & Schmierer as a consultant on top of your consultancy work. What is the reason behind that?
Louie: Our consultancy work complements that of a law firm. We deal with rules, regulations and guidelines which may require legal interpretation and advice on the relevant legislations for our clients. Working together with Ravenscroft & Schmierer’s progressive and dynamic team would not only enhance our service capability but also means that the clients are able to outsource its legal and compliance function whilst maintaining a leaner in-house team, which would be more efficient and cost effective.
Nazahat: It is said that one of the major skills required in consulting is leadership. Do you agree with that?
Louie: From my point of view, yes, and, for me, there are two aspects to leadership, one is of a commercial and working nature, and another is personal.
With the pandemic, it is not easy to maintain business. It is therefore important to lead from the front, facilitate your colleagues and communicate with your clients, so that we all work together towards solutions for the issues and matters at hand. To build your team, it is important to empower your colleagues and guide them with the right direction which will give them confidence and a sense of belonging but at the same time, be strong and communicative with your clients, build that trust as they will need you to navigate them through the regulation quagmire!
As for personal leadership, it is essential to care about the "person”, the people we work with, colleagues and clients alike. We are all humans and bringing a sense of human “touch” to what we do, care about them not only in terms business, but who they are and what concerns them, will create the warmth that people will feel. This bond that you have with them will be strong and stand you in good stead when you work with your colleagues and clients.
Nazahat: You have years of experience in the finance industry. How would your previous employers describe you in three words?
Louie: “Diligent, communicative and resilient”. I always stressed that we should keep a harmonious cooperation between the front office and back office. The integration of a company from end to end will not only bring about efficiency, but it will also be more effective as all interests will be aligned. The issues identified should be properly managed from the start and all stakeholders in the process will have a better grasp of the risks and the rules and regulations involved. But this is a delicate balance as there are different and divergent business needs and risks to manage, thus having great teamwork and communication skills together with solid work ethics are essential.
Nazahat: What do you like to do in your spare time?
Louie: Work-life-balance is important, but not easily achieved in consultancy, especially as we are still on the road to building our platform. Outside my working life, I like to do sports, and I love to play football, but field hockey is my game. Besides that, I love cars and would go for a drive whenever I can. I really don’t mind what car I drive as long as it is enjoyable with character.
Nazahat: What else would you like to share with us?
Louie: There’s no doubt that the pandemic has delivered challenges to Hong Kong businesses and society. I have seen closures of businesses and volatility in financial markets. With the current war in Europe, there will be more unease and concerns around us as well. It is advisable to think and plan ahead, regroup and reassess if appropriate, strengthen with the right business strategy and measures in order to rebuild and recover from this, especially in the age and advent of digital transformation. Despite the negativity surrounding us, we should take this as an opportunity to plan our moves ahead and stay positive!