Hong Kong's SFC Fines HSBC Broking Securities (ASIA) HK$9.6 Million
By Kenan Machado
HONG KONG--Hong Kong's securities regulator Thursday said it has fined a unit of HSBC Holdings PLC HK$9.6 million (US$1.22 million) for "systemic deficiencies" in selling bonds between April 2015 and March 2016.
The Securities and Futures Commission said HSBC Broking Securities (Asia) Ltd. failed to conduct proper and adequate due diligence on individual bonds before recommending them to clients and failing to keep proper records of the investment advice given by sales staff. The broking unit of the London-based bank sold 378 bonds, of which 153 involved recommendations or solicitations made to clients, the regulator said. The bonds sold by HSBC Broking under the SFC's review were only allowed to be sold to professional investors and had a minimum ticket size of HK$500,000.
An HSBC spokesman said HSBC Broking acknowledges and apologizes for the deficiencies identified by the regulator. "HSBC Broking has strengthened its sales suitability framework and cooperated with the Securities and Futures Commission fully in resolving its concerns," he said.
The SFC said HSBC Broking didn't have an effective system in place to ensure the suitability of bonds it recommended to clients during the relevant period. It also said the broker co-operated with the investigation and had taken steps to "enhance its suitability framework." There is currently no evidence suggesting any client has complained about HSBC Broking's selling practices or suffered losses, the regulator added.
The SFC action comes amid increased scrutiny of the unit's parent globally.
A former high-ranking executive of HSBC was found guilty by a U.S. jury in June on charges that he misused information about a client's $3.5 billion currency trade to make millions of dollars for the bank. Mark Johnson, HSBC's former global head of foreign-exchange cash trading, was the first banker to face criminal charges stemming from a U.S. Justice Department probe into foreign-exchange rate manipulation. Mr. Johnson wasn't accused of rigging exchange rates, the main focus of the broader Justice Department probe.
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July 19, 2018 06:18 ET (10:18 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.