HK SFC Fine on Sales Controls

On May 29, HK SFC fined Noah Holdings HK$5mn for sales controls.

  • SFC fined Noah Holdings HK$5mn for system and control failure in product sales.

Alleged Violations

  • Internal system, control failures, in sale and distribution of investment products.
  • Failure to comply with requirements on know-your-client, product due diligence,
    suitability assessment, information to clients and sales supervision and controls.

SFC Findings

  • Action followed inspection and review which found concerns between 2014-2016.
  • Defective questionnaires used to assess client risk appetite, risk tolerance levels.
  • Failed to ensure features and risks of investment products sufficiently considered
    when assigning risk rating to a product, as part of product due diligence process.
  • Consequently, the firm sold potentially unsuitable investment products to clients.
  • Did not require sales staff to document rationale for advice or give clients a copy.
  • Inadequate supervision, control mechanism in place for monitoring product sales.


  • Took into account, that firm engaged an independent reviewer to conduct review.
  • To address SFC regulatory concerns, and review its internal systems and controls.
  • Noah UK had agreed to reimburse affected clients for their loss from product sale.
  • Took action to strengthen internal systems, controls, engaged external consultant.
  • Undertook to provide SFC with report prepared by an reviewer within 12 months.
  • Cooperated with SFC to resolve concern; had no disciplinary record with the SFC.