The Securities and Futures Commission (SFC) has reprimanded and imposed a fine of HK$4.2 million on HSBC for breaching disclosure requirements in research reports on Hong Kong-listed securities over an eight-year period.

Following a self-report by HSBC, the Hong Kong Monetary Authority (HKMA), in collaboration with the SFC, conducted an investigation.

The regulators found that HSBC had failed to disclose, or had made inaccurate disclosures regarding, its investment banking relationships with various companies covered in research reports published between 2013 and 2021.

These issues, attributed to deficiencies in HSBC’s data recording and mapping across systems, are estimated to have affected disclosures in more than 4,200 research reports on Hong Kong-listed securities.

The SFC concluded that HSBC did not ensure compliance with disclosure requirements or the accuracy of its research report disclosures, and had not acted with due skill and care, nor implemented effective systems and controls.

In determining the disciplinary sanction, the SFC took into account that there was no evidence of client losses arising from the disclosure issues, that HSBC had undertaken reviews to identify the causes and extent of the breaches, had taken steps to strengthen its systems and controls to prevent recurrence, and had co-operated with both the HKMA and SFC throughout the investigation.

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