Convoy Asset Management has been fined by the Hong Kong financial regulator for lacking proper due diligence and documentation procedures.
The Securities and Futures Commission (SFC) has reprimanded and fined Convoy AM HK$6.4m (£672,598, $830,000, €752,770) for control failures in solicitation and recommendation of bonds.
Between March 2015 and January 2017, the firm referred clients to a third-party platform to execute 30 transactions of Chapter 37 bonds, which are debt securities offered only to professional investors.
However, the SFC said that the firm’s due diligence on the products was “inadequate”.
It also lacked proper documentation procedures as well as internal controls to monitor the sale of the bonds through the third-party platform.
Repeated reminders
The SFC said: “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.”
The regulator added that there were no client complaints or losses and Convoy has decided to stop selling Chapter 37 bonds.
Convoy AM is a subsidiary of financial advice firm Convoy Financial Group in Hong Kong.
It provides a range of financial products including insurance and MPF mutual funds, securities and mortgages.
The asset management arm holds three licences from the SFC: dealing in securities (type 1), advising on securities (type 4) and asset management (type 9).
For more insight on asset and wealth management in Asia, please click on www.fundselectorasia.com
