Hong Kong Securities and Futures Commission fines Shengbao Finance 4 million for selling restricted virtual asset products to retail clients

[BitPush] The Hong Kong Securities and Futures Commission (SFC) recently announced a case of virtual asset trading compliance. The SFC imposed a penalty of HKD 4 million on Standard Chartered Financial (Hong Kong) Limited.

The key issue of the violation is that Standard Chartered Financial distributed virtual asset products, which should only be available to professional investors, to unsuitable retail clients on its online trading platform. From November 2018 to November 2022, nearly four years, there were 1,446 virtual asset transactions on the platform, involving 130 retail clients and 32 virtual asset products. Notably, all 32 products belong to complex categories, with 21 being exchange-traded derivatives.

The SFC investigation found that Standard Chartered Financial had three major deficiencies when providing these products: first, it failed to assess whether clients had the necessary knowledge to invest in virtual assets; second, it did not provide sufficient product information and risk disclosures to clients; third, it lacked specific warning statements regarding virtual assets. All of these violations contravened the relevant circulars issued by the SFC to licensed intermediaries.

This case provides lessons for both trading platforms and investors. For platforms, risk management of virtual asset products and client classification must be strictly implemented. For investors, even on licensed platforms, it is essential to confirm whether they are correctly classified and whether the trading products match their risk tolerance.