The Securities and Futures Commission (SFC) of Hong Kong has resolved its compliance concerns with Swiss banking firm Julius Baer. Under the resolution, the SFC reprimanded and fined Julius Baer $3m.
SFC said Julius Baer, which is licensed to provide services only to professional investors, failed to: take adequate steps to identify clients as professional investors before treating them as such; to conduct an annual confirmation as to whether its clients continued to fulfil the professional investor requirements; and to maintain adequate written records of its investment advice given to clients.
According to the SFC the failures took place between October 2006 and July 2008.
Julius Baer did not admit to the failures as identified by the SFC, but it agreed to engage an independent reviewer to review its internal controls in relation to its compliance with the regulatory requirements for treating clients as professional investors and the provision of investment advice.
Mark Steward, executive director of enforcement at SFC, said: “The difference between professional investors and ordinary retail customers is a profoundly important one. Firms that do not classify customers properly, in strict compliance with the requirements, impose undue risks on those customers. The SFC will not hesitate to take deterrent action in these cases.”