Hong Kong's SFC Fines HSBC Broking Securities (ASIA) HK$9.6 Million
July 19 2018 - 6:33AM
Dow Jones News
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.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
July 19, 2018 06:18 ET (10:18 GMT)
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