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HSBC Private Bank (Suisse) appeals Hong Kong SFC's fine


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HSBC Private Bank (Suisse) appeals Hong Kong SFC's fine

HSBC PrivateBank (Suisse) SA is appealing a HK$605 million fine imposed by HongKong's securities regulator for its alleged misconduct in selling products toprivate banking clients, The Wall StreetJournal reported May 5.

Hong Kong's Securities and Futures Commission imposed thefine in July 2015. The commission alleged that the firm failed to informclients of the risks associated with its products, which included notes issued andguaranteed by the now-defunct Lehman Brothers Holdings Inc., according to oneof HSBC's lawyers. The commission said the firm should have informed clientsabout the risk a few months before Lehman Brothers' bankruptcy in September2008. It also said the firm sold products that were too risky for certainclients.

Aside from the fine, the commission wanted to revoke thefirm's license and ban it from advising on securities in Hong Kong.

The products were sold between 2003 and 2008.

Defending HSBC, Anthony Neoh, counsel for the bank and aformer chairman of the commission, argued that the bank would not have beenable to predict Lehman Brothers' eventual bankruptcy. He noted that LehmanBrothers' had high credit quality that virtually remained unchanged until itsbankruptcy filing.

A lawyer familiar with the proceeding said the complaintscame from HSBC clients who had execution accounts. Clients with such accountsdo not take advice or recommendations from the bank, but are consideredknowledgeable enough to make their own investment decisions. The bank merelyexecuted the clients' orders and trades, according to the person.

HSBC Private Bank (Suisse) is a unit of