HONG KONG (Reuters) - Hong Kong's markets regulator fined two HSBC (L:HSBA) (HK:0005) units HK$3.5 million (about $450,000) on Tuesday for regulatory breaches when placing money in HSBC bank accounts.
The Securities and Futures Commission (SFC) said that some of the 53 funds managed by HSBC Investment Funds (Hong Kong) Limited and HSBC Global Asset Management (Hong Kong) had placed cash deposits with HSBC's banking operations.
While these deposits were placed in interest-bearing accounts, most did not receive any interest.
The SFC said that the two units had failed to ensure that the cash had earned interest at a rate equal to or higher than the prevailing commercial rate, as they are required to do when placing assets with a "connected person".
They had also failed to minimize the conflicting interests of the Funds' investors and the Hong Kong Shanghai Banking Corporation.
HSBC said in a statement that HSBC Investment Funds (Hong Kong) and HSBC Global Asset Management (Hong Kong) had "strengthened internal controls, procedures and practices for managing cash deposits".
The investment managers had also agreed to make a voluntary payment of US$433,257 to the affected funds representing the financial impact arising from their failures, and engage an independent review into its internal systems and controls, the SFC statement said.