The Securities and Futures Commission of Hong Kong has reprimanded and fined BNP Paribas Wealth Management $4 million for overcharging its HNW clients between 1 January 2011 and 31 December 2013.

The SFC’s investigation found that the monetary benefits (including charges, mark-ups and fees) that BNP received from about 2,300 client transactions exceeded the levels it claimed to be extracting in the documents it was giving to its customers. The total overcharged amount was around $9½ million. The transactions in question covered different types of investment product such as equities, bonds, structured products, options, swaps and funds.

BNP, according to the regulator, broke the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission by failing to exercise due skill, care and diligence to ensure that the monetary benefits it received from its clients' transactions were fair, reasonable and in accordance with the information it gave to those clients. General Principle 2 of the code says that a registered person, in conducting business activities, should act with due skill care and diligence, and in the best interests of its clients. Paragraph 2.2 of the code also says that the charges, mark-ups and fees that 'affect' each client should be fair and reasonable.

In setting the penalty, the SFC gave BNP a discount because:

• it agreed to hire an independent reviewer to ensure that it returns all overcharged amounts to the clients in question;
• it has repaid all overcharged amounts received from current clients and is in the process of repaying former clients;
• it told the SFC (and the Hong Kong Monetary Authority) about the misconduct off its own bat;
• it 'proactively co-operated' with the regulator, whatever that means; and
• it has an otherwise clean disciplinary record.

BNP is an authorised financial institution under the supervision of the Hong Kong Monetary Authority and is a registered institution under the Securities and Futures Ordinance, doing business in Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities.