SEBI said that no further directions are required against HSBC since the case has been resolved between the bank and the actress.
SEBI has disposed the case relating to actress Suchitra Krishnamoorthi against HSBC Bank for alleged mismanagement of her funds.
In January 2013, Suchitra had complained to market regulator SEBI that she suffered losses due to excessive churning of her mutual fund portfolio. Suchitra was registered with HSBC as a client of retail banking and wealth management services.
SEBI’s
investigation revealed that the bank had invested in 38 different schemes of
various fund houses.
“It
was revealed in the investigation that there was excessive churning in the
portfolio of the complainant. Some of the investments were also not in line
with the risk profile of the complainant,” stated the SEBI order.
SEBI’s probe found that a large number of investments made were redeemed in a short span of time and in many instances redemption proceeds were used to invest in similar mutual fund schemes. HSBC Bank earned a commission of Rs. 27.93 lakh from these transactions, SEBI said.
HSBC
Bank in its reply to SEBI said that it had only initiated these transactions
with Suchitra’s instructions. It said that her risk profiling was done based on
standard questions based on templated formats which was merely a subjective
assessment and cannot be basis of all investment decisions of Suchitra.
Following
the reply submitted by HSBC, SEBI gave an opportunity for a personal hearing to
the bank on March 5, 2014. The bank said it has resolved the matter with
Suchitra amicably.
“Considering
the fact that the complainant’s grievance has been redressed amicably by the
bank and taking into account the fact that the proceedings were initiated vide
…I am of the view that no further directions are required as against the bank
in this matter. Hence, the show cause notice is disposed of without any further
directions in the matter,” stated the SEBI order.
SEBI had sent a show cause notice to HSBC on November 01, 2013 alleging that it had violated SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and certain provisions of Code of Conduct of Intermediaries of Mutual Funds.
HSBC Bank’s commissions from selling mutual funds dropped drastically by 61% from Rs. 144 crore in FY12-13 to Rs. 83 crore last year due to a fall in its assets under advisory. HSBC Bank’s assets under advisory also fell from Rs. 17,635 crore to Rs. 13,341 crore in FY13-14.
