SFC Fines Schroder Investment Management $1.8m For Disclosure Failures

Hong Kong’s Securities and Futures Commission (SFC) today reprimanded and fined Schroder Investment Management (Hong Kong) a total of $1.8 million for failing to disclose all notifiable interests in Hong Kong listed shares. This is the second announcement of a fine by the SFC today which also reprimanded and fined State Street Global Advisors Asia $4 million for failing to comply with regulations over specific funds.

Schroder failed to properly follow legal advice received.

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In this particular case, an investigation by the SFC found that between August 2005 and January 2013, Schroder failed to disclose to the Stock Exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term of Hong Kong (SEHK) and the relevant listed companies all notifiable interests in Hong Kong listed shares held in client portfolios and managed by Schroders and its subsidiaries (Schroder Entities) where they did not have, or were unable to exercise, proxy voting rights.

Schroder is responsible for preparing and filing the notices disclosing all notifiable interests in Hong Kong listed shares for the Schroder Entities to SEHK and the relevant listed companies. Even though legal advice received by Schroder advised that an interest in shares was broadly defined and was not confined to the exercise of a voting right, Schroder failed to properly follow the advice.

Schroder said it discovered the disclosure failures in November 2012 when it was preparing to implement a new global system for the monitoring and reporting of disclosable interests in shares.

During February and March 2013, Schroder filed a total of 236 substantial shareholders notices to the SEHK to correct the disclosure notices filed for the Schroder Entities from July 2010 to January 2013.

In deciding the penalty it would impose, the SFC took into account several factors. These included the duration and extent of Schroder’s disclosure failings, the company's self-report to the SFC upon discovery of its disclosure failings, its co-operation with the SFC’s investigation and disciplinary process together with the steps taken to improve its global system for monitoring and disclosing shares in Hong Kong listed companies and its clean disciplinary record.