Hong Kong’s SFC fines HSBC arm US$1.2 million for misconduct in bond sales
HSBC Broking Securities has failed to conduct sufficient due diligence on bond products before recommending to customers in 2015 and 2016
Hong Kong’s Securities and Futures Commission has fined HSBC Broking Securities (Asia) HK$9.6 million (US$1.22 million) for misconduct in the firm’s sale of bonds in 2015 and 2016.
The securities arm of HSBC, the largest bank in Hong Kong and in Europe, is the latest financial institution penalised by the SFC, which has vowed to clear up malpractices in the market.
According to the regulator’s investigation, it found that HSBC Broking Securities had failed to conduct sufficient due diligence on certain individual bonds listed on the Hong Kong stock exchange before recommending them to customers between April 2015 and March 2016.
During the period, HSBC Broking Securities executed 378 transactions of bonds listed on the stock exchange and made 153 recommendations to its clients.
The SFC reprimanded HSBC for not having an effective system in place to assess its clients’ risk profiles and ensure that the bond products recommended were suitable.
The bank also failed to provide adequate product information for its sales staff to fully understand the features and the risks involved so that they could provide adequate disclosure and explanation to clients during the sale process, the SFC said in a statement on Thursday.