The firm failed to conduct due diligence in a bond sale between 2015 to 2016.
The Securities and Futures Commission (SFC) has fined HSBC Broking Securities (Asia) Limited (HSBCBS) $9.6m for deficiencies in its bond selling practices.
The security broker failed to conduct proper due diligence on individual bonds before client recommendation in its execution of 378 bond transactions between April 2015, and March 2016, SFC said in a statement.
“HSBCBS failed to put in place an effective system to ensure suitability of bonds recommended and/or solicited to clients despite the SFC’s repeated reminders to licensed corporations on the importance of compliance with their suitability obligations, and specific guidance regarding the selling of fixed income products, complex and high-yield bonds,” SFC added.
HSBCBS also didn’t have a system in place to assess the risk profile of its clients and provide product information to its sale staff. Moreover, the firm also didn’t have proper documentary records of the recommendations it gave to clients.
SFC added that the security broker has already taken remedial measures to enhance its suitability framework and has cooperated with the regulator in resolving the case.
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