Who can you trust at HSBC?

[Frank]

If they are not providing the correct information to the UK regulators then who can you trust at HSBC....read the Dear CEO letter link at the bottom...

HSBC fined £100,000 by FSA over inaccuracy


LONDON – In mid-December, the UK Financial Services Authority (FSA) fined HSBC £100,000 for "failing to take reasonable steps to ensure the accuracy of transaction reports it made to the FSA from December 2002 until August 2005".

The notice triggered an industry-wide examination of the issue, prompted by a 'Dear CEO' letter the FSA issued on the same day.

According to the FSA, in July 2005 it requested certain trading information from HSBC Stockbroker Services (HSS) which, when reviewed, revealed that HSS had reported the client transaction as a 'sale' prior to a positive announcement and a 'purchase' after it.

Following discussions between the FSA and HSBC, it emerged that transaction reports being made through HSS had been inaccurately representing client purchases as client sales and vice versa.

The regulator noted that it relies on firms to provide accurate transaction reports to enable it to monitor the market effectively, and failing to do so could affect the FSA's ability to maintain confidence in the financial markets and reduce financial crime.

HSBC has taken the necessary remedial steps to improve its systems and controls in this area, and has co-operated fully with the FSA's investigation into this matter, the regulator said.

The FSA has previously fined Bear Stearns £40,000 and UBS £100,000 for inaccuracies in transaction reporting.

The 'Dear CEO' letter can be found at: http://www.fsa.gov.uk/pubs/ceo/transaction_reporting.pdf

[Slick]

Hello Frank

Happy new year...

Just came across this story which it appears HSBC are behind, seems they had been allowing the hedge fund manager to take customers funds, to the tune of over $32million.

you're so right, who can you trust at HSBC

Charles Schmitt goes to Jail for Hedge Fund Fraud
by W William Woods on Thu 26 Oct 2006 09:40 AM EDT 
Charles Schmitt, 61, has pleaded guilty to 19 charges of false accounting involving the CSA Absolute Return Fund and was sentenced to 4.5 years in prison and banned from being company director for 10 years in Hong Kong.

The Judge described it as a "well planned and sophisticated" fraud. There is still a short fall of US$32.5 million in the fund after it was liquidated, and some of that was apparently used by Schmitt to buy real estate assets for himself. Schmitt declared personal bankcuptcy in December last year.

The liquidator is still suing HSBC Institutional Trust Services (Asia) and E&Y for their alledged role in the fund's failure.


http://bizoffshore.com/blog/_archives/2006/10/26/2449162.html

[Frank]

Hello Slick

welcome back

Did further resesarch and found this, seems despite being called TRUST services that they just can't be trusted!!!

Firms sued over failed fund

Tuesday, July 25, 2006

The Hong Kong court-appointed liquidators to an allegedly fraudulent hedge fund are demanding compensation from HSBC Institutional Trust Services (Asia) and Ernst & Young for their role in the fund's failure.
PricewaterhouseCoopers, acting on behalf of CSA Absolute Return Fund, filed papers in Hong Kong's High Court last Tuesday demanding reimbursements that may amount to US$89 million (HK$694.2 million), or 45 percent of the US$198 million raised through subscriptions. Liquidators are also seeking US$8.3 million in costs.

The court documents provide new details about one of the biggest hedge fund cases in Asia, which had 900 companies managing about US$110 billion of assets as of May 31, according to Singapore-based hedge fund researcher Eurekahedge.

 
That represents about 50 percent growth in assets from 2004.

CSA Absolute, which was ordered to liquidate by the Hong Kong High Court in January 2005, was started by Charles Schmitt, the managing director of Charles Schmitt and Associates, a Hong Kong-based fund-of-hedge-funds group.

Schmitt, 61, who was once a senior business manager for the New York Stock Exchange and helped manage the NYSE Pension Fund, has been charged with 19 counts of "false accounting" and will appear at the Court of First Instance in Hong Kong between October 9 and November 20, according to the Hong Kong police.

Schmitt is currently released on court bail and not allowed to leave Hong Kong, the police said. Efforts to contact him were unsuccessful.

The liquidators are seeking damages from Ernst & Young, the fund's auditor. The writ alleges that from the outset of its appointment in 2002, Ernst & Young failed to obtain audited accounts of the fund's investments, failed to identify shortcomings in the financial statements that were provided by the invested funds, and did not recognize discrepancies in the company's financial statements.

In a statement last Thursday, Ernst & Young's Hong Kong office acknowledged it was aware the liquidators filed a writ.

"Ernst & Young is confident that their work for CSA complied with all applicable standards and that the firm will successfully defend any claims pursued by the liquidators," the statement said.

CSA Absolute's custodian, Bermuda Trust (Far East), which was acquired by HSBC Holdings in 2004 as part of its acquisition of Bank of Bermuda Group, is also being sued.

The trust was subsequently renamed HSBC Institutional Trust Services (Asia).

Also named was Bank of Bermuda (Cayman), which performed administrative services for the fund.

Vinh Tran, a spokesperson for HSBC in Hong Kong, declined to comment.

The court documents allege Schmitt, acting as the fund's adviser, created a series of so-called "shadow funds" in order to "misappropriate the subscription moneys."

All of CSA's investments were made into the fake vehicles, the writs state.

"The shadow funds were not genuine funds, had no assets and no underlying investments," the writ claims.

Between March 2002 and June 2004, more than 250 payments worth US$207 million were made to the entities, according to the court filings.

Many of the shadow funds had brand names similar to well-known funds that Schmitt was supposedly investing in, the court papers state.

Liquidators have recovered and returned to investors about 55 percent of the US$198 million raised by the CSA Fund, PricewaterhouseCoopers said in a statement Wednesday. BLOOMBERG