HSBC subsidiary settles with BCSC for $1 million
A subsidiary of global bank HSBC has agreed to pay more than $1 million to settle allegations it forced clients to redeem company-branded mutual fund units when it stopped doing business with dozens of independent dealers, potentially harming the clients through losses and tax consequences.
According to the settlement agreement reached Wednesday between HSBC Global Asset Management (Canada) Ltd. and the British Columbia Securities Commission, the market value of the required redemptions was about $21.9 million and more than 1,000 client accounts were affected.
“GAM Canada admitted that requiring people to redeem their units early was unfair, because investors were initially told that the funds were suitable for long-term investment time horizons,” the B.C. regulator said in a statement.
“In addition to the investment losses and tax consequences, the redemptions may have also led to lost investment opportunities, and potential re-acquisition costs to replace investments.”
The settlement agreement signed by HSBC Global Asset Management Canada chief executive Marc Cevey and BCSC executive director Peter J. Brady said the financial services firm has already earmarked about $625,000 that is to be paid to around 750 client accounts before Dec. 31.