The Securities and Futures Commission (SFC) has reprimanded and fined The Hongkong and Shanghai Banking Corporation Limited (HSBC) HK$4.2m after uncovering disclosure failures in thousands of research reports on Hong Kong-listed securities spanning eight years.
The fine followed a joint investigation by the SFC and the Hong Kong Monetary Authority (HKMA) after HSBC self-reported the issue. Regulators found HSBC had failed to disclose, or disclosed incorrectly, its investment banking relationships in research reports published between 2013 and 2021.
According to the SFC, these breaches were due to deficiencies in HSBC’s data recording and mapping systems, impacting more than 4,200 research reports. The regulator concluded the bank had not acted with due skill and care, nor had it ensured the accuracy of disclosures or maintained effective systems and controls to prevent such breaches.
The SFC noted that while no client losses were identified as a result of the failures, the scale of the issue warranted regulatory action. HSBC has since undertaken reviews to determine the causes and scope of the breaches and has enhanced its systems and controls to prevent similar issues in future.
The SFC also acknowledged HSBC’s co-operation throughout the investigation, which influenced the level of the disciplinary sanction.
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