HSBC Private Bank fined record HK$400 million, as appeals tribunal concludes earlier SFC sanction ‘was correct’
Tribunal rejects HSBC’s appeal of 2015 SFC sanction, but lowers fine to HK$400m from HK$605m
HSBC Private Bank (Suisse) was fined a record HK$400 million (US$51.2 million) on Tuesday by the Securities and Futures Commission, after losing its appeal against a 2015 ruling for misconduct relating to the sale of structured products linked to Lehman Brothers.
The fine is the largest ever issued by the SFC.
HSBC Private Bank (Suisse) also had one securities licence suspended and one partially suspended, each for a period of one year beginning on Tuesday.
In a statement, HSBC said that the revocation of the licences would not affect its private banking business because its private banking operations in Hong Kong were no longer carried out by the legal entity whose licences had been revoked.
Between January 2003 and December 2008 HSBC Private Bank (Suisse) sold a series of investment products linked to the fortunes of Lehman Brothers. When the US investment banking giant collapsed in 2008, derivative products linked to the bank became worthless and investors suffered losses.
These investors complained to HSBC, the SFC and the Hong Kong Monetary Authority, Hong Kong’s banking regulator, and the SFC launched an investigation.