HSBC fined £100,000 by FSA over inaccuracy

LONDON – In mid-December, the UK Financial Services Authority (FSA) fined HSBC £100,000 for "failing to take reasonable steps to ensure the accuracy of transaction reports it made to the FSA from December 2002 until August 2005".

The notice triggered an industry-wide examination of the issue, prompted by a 'Dear CEO' letter the FSA issued on the same day.

According to the FSA, in July 2005 it requested certain trading information from HSBC Stockbroker Services (HSS) which, when reviewed, revealed that HSS had reported the client transaction as a 'sale' prior to a positive announcement and a 'purchase' after it.

Following discussions between the FSA and HSBC, it emerged that transaction reports being made through HSS had been inaccurately representing client purchases as client sales and vice versa.

The regulator noted that it relies on firms to provide accurate transaction reports to enable it to monitor the market effectively, and failing to do so could affect the FSA's ability to maintain confidence in the financial markets and reduce financial crime.

HSBC has taken the necessary remedial steps to improve its systems and controls in this area, and has co-operated fully with the FSA's investigation into this matter, the regulator said.

The FSA has previously fined Bear Stearns £40,000 and UBS £100,000 for inaccuracies in transaction reporting.

The 'Dear CEO' letter can be found at: http://www.fsa.gov.uk/pubs/ceo/transaction_reporting.pdf