Compliance
Compliance Corner: HSBC

The latest compliance issues in wealth management in North America.
HSBC
HSBC confirmed today that
it will pay $765 million to settle the Justice Department's
claims that it willfully covered up risks associated with
residential-mortgage products ahead of the 2008 financial crisis.
The bank had initially flagged that a settlement of this size was
in the offing when it issued interim financial results a few
weeks ago.
The UK/Hong Kong-listed lender told this publication that it had
reached the settlement.
According to various media reports (Wall Street Journal,
CitiAM, other) between 2005 and 2007, the bank placed
defective mortgages into residential mortgage-backed securities
that it created and sold, according to claims by the US Justice
Department this week.
Prosecutors claim that HSBC's bankers overlooked mortgages in the
securities that were likely to default and failed to tell
investors about the risks.
“We are pleased to put this investigation related to activity
that occurred more than a decade ago behind us,” Patrick J Burke,
president and chief executive, HSBC USA, said in a statement
emailed to this news service.
“Since the financial crisis, HSBC has been strengthening our
culture, processes and internal controls to ensure fair outcomes
for our clients. The US management team is focused on putting
historical matters into the rear view mirror and completing the
turnaround of HSBC’s US operations," Burke added.
In paying the civil penalty, HSBC joins the ranks of other
lenders settling with the DoJ about how banks dealt in
mortgage-backed securities. In August, Wells Fargo said it would
pay $2.09 billion to settle similar claims. Other banks settling
claims include Barclays, Royal Bank of Scotland, JP Morgan and
Bank of America.