SIP Nordic Fondkommission receives a warning and an administrative fine

Summary

SIP Nordic Fondkommission AB (SIP Nordic or the company) is an investment firm with authorisation to conduct securities business pursuant to the Securities Market Act (2007:528). Finansinspektionen has investigated whether SIP Nordic has ensured the consideration of the interests of its customers when a tied agent has provided investment advice on behalf of the company.

The investigation shows that the company has violated a number of central customer protection provisions when it has provided investment advice to retail customers regarding one corporate bond and six leverage certificates that were associated with high risk. There have been serious deficiencies in the suitability assessments conducted by the company, which in turn has resulted in customers being recommended a corporate bond associated with significantly higher risk than the customers stated they were prepared to take. The suitability explanations were also deficient, and customers did not receive sufficient information about the costs and fees associated with the products. Furthermore, the company has received third-party remuneration despite this not being allowed, and it did not identify or manage a clear conflict of interest relating to management staff in the tied agent. As a result, there have been strong economic incentives for both the company and the tied agent to recommend certain products to the customers even though the products were not suitable. Through its actions, the company also violated its fundamental obligation to consider the interests of its customers (duty of care) and has not acted in such a manner as to maintain the confidence of the general public for the securities market.

Finansinspektionen notes that the breaches in this matter are serious. This means that the company’s authorisation will be withdrawn unless it can be considered to be sufficient to issue the company a warning. The authority notes that the company has taken powerful and adequate measures to resolve the deficiencies and that the operations currently can be judged to be in accordance with current customer protection regulations. It is also of material importance that the identified deficiencies are only attributable to one of the company’s tied agents. Taking this into account, and since SIP Nordic has not previously been the object of an intervention, the authority makes the assessment that the expectation the company will be able to follow the rules is strong enough for it to be sufficient to issue the company a warning with an administrative fine of SEK 6.7 million.