A Bank of China subsidiary was fined HKD 10 million ($1.27 million) this Monday by the Hong Kong Securities and Futures Commission (SFC).
According to the regulator, BOCI Securities Limited (BSL) failed to meet a number of regulatory standards surrounding its sale of investment products.
The SFC investigation into BSL took place over the course of two periods of time between 2015 and 2016.
During one of those periods, which stretched from April 2015 to March 2016, the regulator looked at the broker’s distribution of bonds to its clients.
In a shorter four-month period, between October to December of 2016, the regulator examined BSL’s sale of equity-linked notes, mutual funds, bonds, and accumulators.
Poor due diligence
According to a statement released by the SFC, the Bank of China subsidiary failed to conduct proper due diligence on some of its products.
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The SFC added that the broker did not assess whether its clients had enough cash to take on the risks associated with trading in certain leveraged instruments.
Unsurprisingly, BSL employees also failed to provide advice to some customers that matched their risk appetite.
The SFC said in its statement that BSL had fully cooperated with its investigation and that this had been taken into account when the fine was issued.
Having been fined, the Bank of China subsidiary will implement procedures to ensure client complaints can be resolved more efficiently.
The securities brokerage has also “taken remedial measures” to ensure that its investment products sales methods don’t breach regulations again.
It’s been a busy month for the SFC. Just last week, the Hong Kong regulator fined UBS $48 million for breaching certain regulatory standards pertaining to its sponsorship of a company’s initial public offering.
The financial watchdog also fined Standard Chartered close to $8 million last week for similar reasons.