HSBC Private Bank (Suisse) and the Securities and Exchange Commission settled for $12.5 million over charges that the Swiss banking unit provided illegal advisory and other financial services to American investors for over 10 years by using brokers not registered with the SEC.
In agreeing to pay $12.5 million to settle the SEC's charges, HSBC Private Bank admitted wrongdoing and willful violation of Section 15(a) of the Securities Exchange Act of 1934 and Section 203(a) of the Investment Advisers Act of 1940.
According to the SEC, the Swiss HSBC branch provided cross-border brokerage and advisory services in the U.S. for over 10 years without registering with the SEC, making this activity illegal.
The findings state that over the lifespan of the misconduct, HSBC Private Bank recruited 368 US client accounts and collected fees totaling approximately $5.7 million as Swiss personnel travelled to the U.S. to solicit clients, provide investment advice and participate in securities transactions, furthering their relationships with U.S. investors via e-mail and overseas postage.
As HSBC understood the risk of violating federal securities laws, the firm created a North American desk to consolidate U.S. client accounts, drawing backlash from firm relationship managers who did not want to lose clients by transferring them to the new North American desk. Upon further review, some U.S. accounts that were to be closed pursuant to compliance initiatives actually remained open.
Upon admitting that it violated federal securities laws, HSBC Private Bank accepted a censure, cease-and-desist order and a $12.5 million fine, which includes $5.7 million in disgorgement, $4.2 million in prejudgment interest and a $2.6 million penalty.
If you have invested with HSBC's Swiss Private Bank or with any other international firm whose failure to register personnel with the SEC, FINRA or other appropriate national regulators, potentially resulting in domestic educational lapses or other deficiencies that have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.