SFC slaps wealth management firm Noah Holdings with $5m fine

The company sold unsuitable investment products as a result of defective risk profiling questionnaires.

The Securities and Futures Commission slapped wealth and asset management firm Noah Holdings Limited (Noah HK) $5m over the company’s internal system and control failures in the sale and distribution of investment products.

Noah HK failed to comply with various regulatory requirements on know-your-client, product due diligence, suitability assessment, information for clients, and sales supervision and controls, affecting over 1,243 transactions worth about US$523m.

The regulator discovered that the company’s risk profiling questionnaires were defective in certain areas and that the company sold potentially unsuitable investment products as a result of its inadequate risk profiling and product risk rating frameworks.

Noah HK also did not require its sale staff to document the rationale underlying the investment advice or recommendations nor did it require them to provide clients with copies of the information due to the lack of a control mechanism in place to monitor the sale of investment products.