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, Bloomberg News reported. 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 today, as it upheld previous findings by the Securities and Futures Commission (SFC). HSBC said that 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. “The bank’s failings were serious; they were systemic in nature, extended over a relatively lengthy period of time and not only put clients at risk but caused loss to many,” the tribunal said in its ruling. “Against that, however, it has to be recognized that the bank’s failings were not shown to be dishonest, they were not shown to be intentional or reckless.”
