DIFFERENT ANGLE by Kenneth Rijock
The Securities & Exchange Commission has imposed a cease & desist order against HSBC Bank USA, N.A., and fined it US$10.5m, for allowing a private pension fund that was a client to use its name & logo in connection with an investment scheme that committed fraud, material misrepresentation, omissions of material facts, and which misappropriated investor funds. The bank, which neither admitted nor denied the allegations, is a subsidiary of HSBC Bank plc. Investors erroneously believed that their money, intended for placement in a retirement or college "trust plan," was to be held by the bank, but it was diverted by the pension fund firm for excess commissions, and other undisclosed uses.
- Pension Fund of America LC
- PFA Assurance Group
The thrust of the order appears to be that HSBC had failed to conduct the necessary compliance and ongoing due diligence with respect to the pension fund.
For readers wishing to read the entire order:
Order Instituting Cease & Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist order Pursuant to Section 8A of the Securities Act of 1933.
http://www.sec.gov/litigation/admin/2007/33-8844.pdf
The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.
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