Hong Kong's regulator, the Securities and Futures Commission (SFC) has fined Convoy Asset Management HK$6.4m for 'control failures' in solicitation and recommendation of bonds to clients.
The SFC said in a statement that Convoy's due diligence on the products was "inadequate."
The regulator ruled that Convoyreferred clients to a third party platform between 2015 and 2017 to execute 30 transactions of bonds listed under Chapter 37 of the Main Board Listing Rules, some of which involved solicitation or recommendation made to clients.
Despite the SFC's repeated reminders to licensed corporations on the importance of compliance with the suitability obligations [...] the firm failed to put in place an effective system to ensure product suitability."
The statement continued: "Despite the SFC's repeated reminders to licensed corporations on the importance of compliance with the suitability obligations and the specific guidance regarding the selling of fixed income products, complex and high-yield bonds, the firm failed to put in place an effective system to ensure product suitability."
In deciding the disciplinary sanctions, the SFC took into account that there is no evidence suggesting complaints or losses by Convoy's clients, has decided to cease selling Chapter 37 Bonds to clients, it said.
Convoy AM is a subsidiary of Convoy Financial Group, also based in Hong Kong.