Shares in HSBC Holdings encountered fierce selling pressure yesterday and came under fresh fire as the Democratic Party scolded the lending giant for failing to warn the market about falling profits, even though it is not legally required to do so. Party chairman Albert Ho Chun-yan said he had asked Hong Kong Exchanges and Clearing to investigate why HSBC did not provide investors with any forewarning before reporting its results on Monday. Mr Ho said he would file a complaint with the Securities and Futures Commission should he not receive a response within two weeks. 'The fact that [HSBC] did not issue a profit warning would undoubtedly affect investors,' he said. 'This makes it hard not to suspect there was some form of insider trading that may have affected the market.' Main-board companies are only required to report price-sensitive information to the market and are not obliged to issue profit warnings. But many other leading banks, including Bank of East Asia and Fubon Bank, did alert the market about sliding profits. 'There was no need to have a profit warning,' HSBC group chief executive Michael Geoghegan said at a briefing on Tuesday. 'The assessment of the financials was clear in the marketplace. All in, the analysts were pretty close to what the results were.' HSBC announced on Monday net income last year had plunged more than 70 per cent from a year earlier and it would launch a US$17.7 billion rights issue to bolster capital. Its stock slumped 4.43 per cent yesterday to HK$44.20 after plummeting 18.79 per cent on Tuesday. Mr Ho said HSBC's results indicate the company must have been aware of the scale of its problems late last year, when other big banks began issuing profit warnings. A spokesman for HSBC disputed that, however, saying the bank's decisions to close the bulk of its US personal finance business and to recognise a goodwill impairment charge were made starting only late last month. HSBC recorded a one-time US$10.56 billion write-down on its US personal finance unit. HKEx chief executive Paul Chow Man-yiu said listing rules required the board of directors to disclose price-sensitive information to the market. 'And it is up to the board of directors of the listed companies to decide if the result information is price sensitive,' Mr Chow said. HKEx has a limited range of sanctions available to enforce listing regulations and deter companies from committing transgressions. 'The incentive is to say nothing rather than risk being wrong,' said shareholder activist David Webb. 'What we need is to introduce statutory backing for the listing rules, so you can be fined for not reporting something you should have or even jailed for something worse.' But he added: 'Politically, it seems unlikely to happen soon, because the government has made it quite clear that it won't do anything the tycoons don't like.'