HSBC Broking Securities (Asia) has been reprimanded and fined 9.6m Hong Kong Dollars (£960,000) for “systemic deficiencies” in its bond selling practices by Hong Kong’s financial regulator.
The Securities and Futures Commission (SFC) said HSBC failed to conduct proper due diligence on bonds before recommending them to clients, did not have an effective system in place to asses its client’s risk profile, did not properly train sales staff and did not maintain proper records of advice and solicitations given to clients.
When deciding on the sanction the SFC considered that HSBC failed to put in a proper system despite the SFC’s repeated reminders of the importance of compliance with suitability obligations and specific guidance on the selling of complex and high-yield bonds.
It also wanted to send a strong message to the market to deter similar conduct.
In mitigation the SFC said that HSBC co-operated with the SFC, has taken remedial measures to improve its systems and there was no evidence clients had complained or suffered losses.
HSBC Broking said: “HSBC Broking has strengthened its sales suitability framework and cooperated with the Securities and Futures Commission fully in resolving its concerns. HSBC is committed to ensuring fair outcomes for customers and complying with all the regulations that govern our businesses.”