(Yicai Global) May 30 -- A Hong Kong regulator has punished the local unit of Noah Holdings, a Chinese wealth and asset manager, to the tune of HKD5 million (USD637,000) for internal system and control failures in its sales and distribution of investment products amid the special administrative region's latest crackdown on sources of financial risk.
Noah failed to comply with a number of regulatory requirements including product due diligence, providing sufficient information to clients, suitability assessment, and sales supervision and controls, the Securities and Futures Commission said yesterday.
China's central government has put the country's rapidly expanding financial sector under greater scrutiny. It will continue to crack down on irregular and illegal activities in the financial sector to forestall risks, said an official statement issued late last year after the Central Economic Work Conference, which sets the national agenda for the world's second-largest economy.
Noah's failings cover the period between January 2014 and June 2016, during which the company sold clients potentially unsuitable products as a result of its inadequate risk profiling questionnaires and product risk rating framework, the SFC said. Noah failed to ensure the features and risks of certain investments were sufficiently considered when assigning a risk rating to the product as part of due diligence, the regulator added.
The company has agreed to compensate clients and has appointed an external consultant to conduct an independent review. It will strive to continuously optimize its compliance and risk control mechanism for business execution in the future, Noah told Yicai Global. It will make investment risk control and compliance its two priorities to provide professional, stable, innovative and comprehensive financial services, the firm added.
Parent company Noah Holdings yesterday reported a 16.5 percent jump in unaudited first-quarter net revenue to CNY831 million (USD129 million) from a year earlier. The SFC licensed Noah's wholly owned Hong Kong arm in January 2012 to provide securities dealing and advice, as well as asset management services.
Editor: Mevlut Katik