HSBC Securities (USA) will pay a $750,000 civil penalty to settle with the Securities and Exchange Commission for making misrepresentations to retail clients about the compensation of its dually registered investment adviser and broker representatives.
According to the SEC's order, HSBC Securities told clients that its representatives were compensated based solely on nonfinancial factors and not based on the advisory fees paid to HSBC Securities.
The firm actually considered several financial factors to determine its representatives’ bonus compensation, including the amount of advisory fees that clients paid to HSBC Securities each quarter, which gave the broker/advisers “a financial incentive to generate more advisory fees in their clients' accounts,” the SEC said in release.
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