According to SEC, the banking arm failed to register with the SEC prior to providing cross-border brokerage and investment advisory services to clients and violated federal securities laws.
SEC Division of Enforcement director Andrew Ceresney said: "HSBC’s Swiss private banking unit illegally conducted advisory or brokerage business with U.S. customers.
"HSBC Private Bank’s efforts to prevent registration violations ultimately failed because their compliance initiatives were not effectively implemented or monitored."
HSBC Private Bank and its predecessors amassed as many as 368 US client accounts and collected fees totaling about $5.7m.
The SEC’s order noted that HSBC understood there was a risk of violating the federal securities laws by providing unregistered broker-dealer and investment advisory services to clients and that the bank violated Section 15(a) of the Securities Exchange Act of 1934 and Section 203(a) of the Investment Advisers Act of 1940.
Matthew Estabrook and David Karp conducted the SEC’s investigation, and Laura Josephs supervised the case.
