The SFC reprimands and fines HSBC HK$4.2 million for disclosure failures in research reports over an eight-year period. The investigation found HSBC failed to disclose and/or made incorrect disclosures due to data recording and mapping issues across systems.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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The Securities and Futures Commission ("SFC") has penalized and reprimanded The Hongkong and Shanghai Banking Corporation Limited ("HSBC") with a HK$4.2 million fine for violating its disclosure requirements in research reports published on Hong Kong-listed securities over an eight-year period.
Following HSBC's self-report, the Hong Kong Monetary Authority ("HKMA") and the SFC conducted a joint investigation that revealed HSBC's failure to disclose and/or make accurate disclosures concerning its investment banking relationships with certain companies mentioned in its research reports between 2013 and 2021. These lapses were traced to shortcomings in HSBC's data recording and mapping across its systems, impacting over 4,200 research reports.
The SFC concludes that HSBC has fallen short in ensuring compliance with disclosure requirements and the accuracy of its disclosures in research reports. The regulator found that HSBC did not exercise due skill and care and lacked effective systems and controls.
In determining the disciplinary action, the SFC considered several factors: no client losses were reported, HSBC conducted reviews to identify the root causes of the breaches, the bank has enhanced its systems and controls to prevent future occurrences, and HSBC's cooperation with both the HKMA and the SFC during the investigation.
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