The Securities and Futures Commission (SFC) has reprimanded and fined BOCI Securities Limited (BSL) HKD 10 million over BSL’s internal system and control failures in its investment product selling practices.

The SFC’s disciplinary action followed an investigation which found that BSL had failed to comply with various regulatory requirements concerning client profiling, product due diligence and suitability assessment in its sale and distribution of investment products, including bonds listed under Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Chapter 37 Bonds).

In particular, BSL failed to 1) properly assess and determine its clients’ risk tolerance level and investment strategy in certain cases; 2) ensure the investment recommendations and/or solicitations made to its clients were reasonably suitable in all the circumstances; 3) ensure the clients had sufficient net worth to be able to assume the risks and bear the potential losses of trading in derivative products and/or leveraged transactions; 3) conduct proper and adequate product due diligence on certain investment products; and 4) implement and maintain adequate and effective internal controls and systems to diligently supervise its sale and distribution of investment products to clients and to ensure its compliance with the regulatory requirements.