HSBC Fined a Record $51 Million Over Lehman-Linked Products
- Private-banking unit fined HK$400 million by appeals tribunal
- SFC originally imposed HK$605 million penalty on HSBC
HSBC Holdings Plc’s private-banking unit was fined a record HK$400 million ($51 million) over sales of structured products linked to Lehman Brothers Holdings Inc. in Hong Kong.
HSBC Private Bank (Suisse) SA will have its license to advise on securities suspended for a year, while its dealing license will be partially suspended, the Securities and Futures Appeals Tribunal said in a ruling Tuesday, as it upheld previous findings by the Securities and Futures Commission. HSBC said the suspensions won’t affect private-banking operations in Hong Kong.
The SFC had originally imposed a HK$605 million fine, penalizing the private bank for alleged failures of its internal controls and sales practices in relation to the sale of Lehman notes and products in the five years leading up to the bank’s bankruptcy in 2008. The subsequent collapse of the Lehman investment products sold to individuals roiled Hong Kong, causing street protests and prompting banks to overhaul sales procedures. The HK$400 million penalty is a record sum, the SFC said on its website.