Hong Kong’s Securities and Futures Commission (SFC) announced on Wednesday that it had reprimanded RBC Investment Services (Asia) Limited (RBC), which is the Asian wealth management wing of the Royal Bank of Canada. The financial services company was slapped with a monetary penalty of HK$7.7 million.
The company was blamed for regulatory breaches related to the mishandling of client assets.
The SFC requires all regulated financial services companies to segregate client money from other funds. However, an investigation by the Hong Kong watchdog revealed that RBC violated this requirement between January 2018 and August 2020 on 86 occasions. The violations involved individual transaction amounts ranging from HK$146 to HK$52 million.
However, that was not the only violation on the part of the Asian wealth management division of the Canada-headquartered investment bank.
Between 3 December 2012 and 26 March 2020, RBC breached rules around client securities. It transferred securities from 65 client accounts, which were held by non-professional investor clients to SEHK Options Clearing House Limited as collateral, but did not have any valid standing authority to do so.
The breaches came to the SFC’s notice after RBC’s remedial actions and self-reporting about the breaches. Additionally, the regulator highlighted that the company cooperated in the investigation and accepted the findings and disciplinary actions without any dispute.
Further, the regulatory breaches did not cause any monetary loss to RBC’s clients.
A Vigilant Regulator
The SFC has been vigilant against the regulated financial market players and actively taking action against non-compliance. Recently, it fined CES Capital International HK$3.2 million only months after slapping a HK$348.25 million penalty on Citigroup’s Asia subsidiary for a series of compliance breaches.
Meanwhile, SFC’s CEO, Ashley Alder recently resigned from his position as he is going to join UK’s FCA as the Chairman in January 2023.
