SFC reprimands and fines HSBC $2.1 million for breaching telephone recording requirements

10 Sep 2019



The Securities and Futures Commission (SFC) has reprimanded and fined The Hongkong and Shanghai Banking Corporation Limited (HSBC) $2.1 million for non-compliance with the telephone recording requirements under the Code of Conduct (Notes 1 & 2). 

The disciplinary action arose from HSBC’s failures to set up or enable voice recording of some of the telephone lines in its Private Banking Division between 8 April 2017 and 31 January 2018, during which 5,830 client order instructions received through 59 affected telephone lines were not tape-recorded.   

The SFC considered that HSBC has failed to put in place effective internal control procedures to ensure proper implementation of the telephone recording function and timely detection of any telephone recording failures. 

In deciding the sanction, the SFC took into account that HSBC:

The case was referred to the SFC following an investigation by the HKMA as part of the joint enforcement collaboration between the SFC and the HKMA.

End

Notes:

  1. HSBC is registered under the Securities and Futures Ordinance to carry on business in Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities. 
  2. Paragraph 3.9(b) of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission provides that, where order instructions are received from clients through the telephone, the registered person should use a telephone recording system to record the instructions and maintain telephone recordings as part of its records for at least six months.

A copy of the Statement of Disciplinary Action is available on the SFC website



Page last updated : 10 Sep 2019