SEC Sanctions HSBC Securities
According to the SEC on March 17, the regulator has censured and fined HSBC Securities $725,000 over alleged failures in disclosure of conflicts of interest in its wrap program.
Between November 2015 and August 2017, HSBC allegedly misled its current and prospective advisory clients and didn’t disclose conflicts of interest related to how it compensated its dually registered investment advisor representatives in the firm’s retail banking and wealth management unit, according to the SEC.
HSBC allegedly stated in its Form ADV submissions as well as in its wrap fee program brochures that the representatives were compensated based on non-financial factors, according to the regulator.
HSBC allegedly did consider several financial factors in determining the representatives’ compensation, including how much clients paid in advisory fees for HSBC Spectrum and Managed Portfolio Account. Those two programs are reportedly available to retail advisory clients and they are charged quarterly advisory fees based on AUM and no commissions for activity in the accounts.
According to the SEC, HSBC also allegedly failed to implement written policies and procedures designed to prevent violations of the Investment Advisers Act of 1940’s provisions on representatives’ compensation.
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