The private bank is at loggerheads with Hong Kong regulators in connection with a fine imposed concerning sale of structured products.

The Swiss private banking arm of HSBC is appealing a HK$605 million ($78 million) fine imposed by Hong Kong’s securities regulator in connection with its sales of structured products including Lehman Brothers Holdings-related notes between 2003 and 2008.

"Certain issues concerning the distribution of structured products by HSBC Private Bank (Suisse) SA, Hong Kong branch prior to 2009 have been investigated by the Securities and Futures Commission (SFC). HSBC has applied to the Securities and Futures Appeals Tribunal (SFAT) for a review of the SFC’s findings resulting from its investigations. As the appeal is pending, we are unable to comment further," a spokesperson for the bank told this publication.

The appeal hearing began in Hong Kong yesterday after the Securities and Futures Commission previously alleged failures in internal controls and sales practices in relation to the sale of the Lehman notes and products called Leveraged Forward Accumulators.

Anthony Neoh, the bank’s senior counsel, reportedly told a hearing that the penalty was excessive. Private bank clients had a higher risk appetite than retail-bank clients and the case featured “vanilla-type” products, the lawyer is quoted by Bloomberg as having said.

The hearing of the Securities and Futures Appeals Tribunal is scheduled to run during this week and next week, HSBC confirmed to this publication.