Hsbc Securities (Usa) Inc.

Event Detail: DOJ CHARGED HSBC SWITZERLAND BY FELONY INFORMATION WITH ONE COUNT OF CONSPIRACY, THE OBJECTS OF WHICH WERE: (I) TO DEFRAUD THE IRS; (II) TO FILE FALSE INCOME TAX RETURNS; AND (III) TO EVADE FEDERAL INCOME TAXES. Status: Final Disposition: ON DECEMBER 10,2019, THE COURT APPROVED A DEFERRED PROSECUTION AGREEMENT (DPA) BETWEEN HSBC SWITZERLAND AND DOJ. THE DPA IS FOR A THREE-YEAR TERM WITH THE POTENTIAL FOR A ONE-YEAR EXTENSION IF DOJ FINDS THAT HSBC SWITZERLAND VIOLATED ANY OF THE TERMS OF THE AGREEMENT. HSBC SWITZERLAND WILL PAY $192.35 MILLION IN PENALTIES. Summary: ACCORDING TO DOCUMENTS FILED AS PART OF THE DPA, BETWEEN 2000 AND 2010 HSBC SWITZERLAND ASSISTED U.S. CLIENTS IN CONCEALING OFFSHORE ASSETS AND INCOME FROM U.S. TAXING AUTHORITIES. THE DPA REQUIRES HSBC SWITZERLAND TO COOPERATE FULLY WITH THE TAX DIVISION AND THE IRS, AS WELL AS TO DISCLOSE INFORMATION IT MAY LATER UNCOVER REGARDING U.S.-RELATED ACCOUNTS. THE $192.35 MILLION PENALTY HAS THREE PARTS: (I) $60,600,000 IN RESTITUTION TO THE IRS, WHICH REPRESENTS THE UNPAID TAXES RESULTING FROM HSBC SWITZERLAND'S PARTICIPATION IN THE CONSPIRACY; (II) FORFEITURE OF $71,850,000, WHICH REPRESENTS GROSS FEES (NOT PROFITS) THAT THE BANK EARNED ON ITS UNDECLARED ACCOUNTS BETWEEN 2000 AND 2010; AND (III) A PENALTY OF $59,900,000. THE PENALTY AMOUNT TAKES INTO CONSIDERATION THAT HSBC SWITZERLAND SELF-REPORTED ITS CONDUCT, CONDUCTED A THOROUGH INTERNAL INVESTIGATION, PROVIDED CLIENT IDENTIFYING INFORMATION TO THE TAX DIVISION, AND EXTENSIVELY COOPERATED IN A SERIES OF INVESTIGATIONS AND PROSECUTIONS, AS WELL AS IMPLEMENTED REMEDIAL MEASURES TO PROTECT AGAINST THE USE OF ITS SERVICES FOR TAX EVASION IN THE FUTURE.

Allegations: THE STATEMENT OF OBJECTIONS IS ADDRESSED TO BANK OF AMERICA MERRILL LYNCH, BARCLAYS, BEAR STEARNS, BNP PARIBAS, CITIGROUP, CREDIT SUISSE, DEUTSCHE BANK, GOLDMAN SACHS, HSBC, JP MORGAN, MORGAN STANLEY, ROYAL BANK OF SCOTLAND, UBS AS WELL AS THE INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION (ISDA) AND DATA SERVICE PROVIDER MARKIT. THE COMMISSION ALLEGES THAT BETWEEN 2006 AND 2009, DEUTSCHE BÖRSE AND THE CHICAGO MERCANTILE EXCHANGE TRIED TO ENTER THE CREDIT DERIVATIVES BUSINESS. THE EXCHANGES ALLEGEDLY TURNED TO ISDA AND MARKIT TO OBTAIN NECESSARY LICENSES FOR DATA AND INDEX BENCHMARKS, BUT, ACCORDING TO THE PRELIMINARY FINDINGS OF THE COMMISSION, THE BANKS CONTROLLING THESE BODIES INSTRUCTED THEM TO LICENSE ONLY FOR "OVER-THE-COUNTER" (OTC) TRADING PURPOSES AND NOT FOR EXCHANGE TRADING. ALLEGEDLY, SEVERAL OF THE INVESTMENT BANKS ALSO SOUGHT TO SHUT OUT EXCHANGES IN OTHER WAYS, FOR EXAMPLE BY COORDINATING THE CHOICE OF THEIR PREFERRED CLEARING HOUSE. THE STATEMENT OF OBJECTIONS SEEKS FINES IN AN AMOUNT TO BE DETERMINED BY THE COMMISSION AS WELL AS IMPOSITION OF A CEASE AND DESIST ORDER. Status: Final Sanction Detail: NONE Summary: ON DECEMBER 04, 2015, THE EUROPEAN COMMISSION CLOSED ITS INVESTIGATION OF 13 INVESTMENT BANKS, INCLUDING HSBC, WITH REGARD TO ALLEGED ANTI-TRUST ACTIVITY IN THE CREDIT DEFAULT SWAPS MARKET, WITHOUT ANY FINDINGS.

Allegations: THE NEW YORK MERCANTILE EXCHANGE, INC. ALLEGED THAT ON JANUARY 31, 2011, A DATE SUBJECT TO A SPOT MONTH SPECULATIVE POSITION LIMIT FOR THE FEBRUARY 2011 GOLD FUTURES CONTRACT, HSBC INADVERTENTLY MAINTAINED A LONG GOLD FUTURES POSITION THAT EXCEEDED THE APPROVED EXPIRATION MONTH HEDGE EXEMPTION OF 5,000 CONTRACTS GRANTED BY THE EXCHANGE ON AUGUST 11, 2010, BY 153 CONTRACTS (3%). UPON BEING INFORMED OF THE EXCESSIVE POSITION, THE NEW YORK MERCANTILE EXCHANGE, INC. ALLEGED THAT HSBC IMMEDIATELY LIQUIDATED ITS OVERAGE POSITION RESULTING IN PROFITS OF $7,250. THE PANEL FOUND THAT IN SO DOING, HSBC VIOLATED COMEX RULE 562. Status: Final Sanction Detail: IN ACCORDANCE WITH THE SETTLEMENT OFFER AND IT FINDINGS, THE BCC PANEL ORDERED HSBC TO PAY THE EXCHANGE IN THE AMOUNT OF $10,000 AND DISGORGE $7,250 IN PROFITS. Summary: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC ACCEPTED AN OFFER OF SETTLEMENT FOR $17,250.00.

Allegations: FAILURE TO PRESERVE ELECTRONIC COMMUNICATION FOR A PERIOD OF THREE YEARS. FAILURE TO REASONABLY SUPERVISE OPERATIONAL AND TECHNOLOGICAL ACTIVES RELATING TO RETENTION OF ELECTRONIC COMMUNICATIONS. NOT PROMPTLY REPORTING FAILURE TO RETAIN ELECTRONIC COMMUNICATIONS. Status: Final Sanction Detail: FINED $500,000.00. RESOLUTION DATE: 12/15/2004.

Allegations: THE NASD REGULATION, INC. ("NASD") ALLEGED THAT HSBC SECURITIES (USA) INC. F/K/A HSBC BROKERAGE (USA) INC. VIOLATED RULE G-30 AND SUPERVISION VIOLATION OF RULE G-27. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC SECURITIES (USA) INC. WAS CENSURED AND FINED $17,500.00, REQUIRED TO PAY $1329.53, PLUS INTEREST, IN RESTITUTION TO PUBLIC CUSTOMERS AND REQUIRED TO REVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING FAIR PRICING AND MARKUPS WITHIN THIRTY (30) DAYS OF ACCEPTANCE OF THIS AWC BY NAC. A REGISTERED PRINCIPAL OF THE FIRM WILL SUBMIT SATISFACTORY PROFF OF PAYMENT OF THE RESTITUTION OT OF REASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECT RESTITUTION TO NASD NO LATER THAN 60 DAYS AFTER ACCEPTANCE OF THIS AWC. ANY UNDISTRIBUTED RESTITUTION AND INTEREST WILL BE FORWARDED TO THE APPROPRIATE ECCHEAT, UNCLAIMED PROPERTY OR ABANDONED PROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LAST RESIDED.

Allegations: THE NASD REGULATION INC. ("NASD") ALLEGED THAT HSBC SECURITIES (USA) INC. VIOLATED: NASD RULE 3360 FOR FAILURE TO TIMELY REPORT ITS SHORT INTEREST POSITIONS TO THE NASD. Status: Final Sanction Detail: THE NASD REGULATION INC. ("NASD") ALLEGED THAT HSBC SECURITIES (USA) INC. VIOLATED: NASD RULE 3360 FOR FAILURE TO TIMELY REPORT ITS SHORT INTEREST POSITIONS TO THE NASD. Summary: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC SECURITIES (USA) INC. WAS FINED $5,000.00.

Allegations: HSBC VIOLATED SECURITIES EXCHANGE ACT RULE 11AC1-1 ("SEC FIRM QUOTE RULE"), NASD CONDUCT RULE 3320 AND NASD MARKETPLACE RULE 4613 (B) ("NASD FIRM QUOTE RULES"). VIOLATION OF NASD CONDUCT RULES 2110 AND 3010. FAILURE TO ESTABLISH AND MAINTAIN WRITTEN SUPERVISORY PROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS CONCERN THE SEC AND NASD FIRM QUOTE RULES. A CENSURE, A FINE OF $8,000 ($5,000 FOR THE FIRM QUOTE RULE VIOLATION AND $3,000 FOR THE SUPERVISION VIOLATION). Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION OF SEC RULE 11AC1-1, RULE 3320, RULE 4613(B) RULES 2110 AND 3010, AS CITED BY THE NASD REGULATION, INC. HSBC AGREED TO PAY A FINE OF $8,000 IN SETTLEMENT OF THIS MATTER. Summary: WITHOUT ADMITTING OR DENYING ANY VIOLATION OF SEC RULE 11AC1-1, RULE 3320, RULE 4613(B) RULES 2110 AND 3010, AS CITED BY THE NASD REGULATION, INC. HSBC AGREED TO PAY A FINE OF $8,000 IN SETTLEMENT OF THIS MATTER.

Allegations: THE NYSE ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED SEC RULE 17A-3 (AND 17A-4) AND EXCHANGE RULE 440 - FILURE TO KEEPBOOKS AND RECORDS CURRENT. VIOLATION OF SEC RULE 17A-11; SEC RULE 15C3-3; RULE 15C3-3(D)(1); SECTION 220(B)(2) OF REGULATION T; EXCHANGE RULE 410(B); EXCHANGE RULE 132; EXCHANGE RULE 345 AND 345.10; EXCHANGE RULE 342 AND 346. CENSURED AND FINED $50,000.00. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC HAS TAKEN CORRECTIVE ACTION IN THIS MATTER AND AGREED TO PAY A FINE OF $50,000.00. Summary: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC HAS TAKEN CORRECTIVE ACTION IN THIS MATTER AND AGREED TO PAY A FINE OF $50,000.00.

Allegations: THE ALLEGATIONS RELATED TO THIS REGULATORY ACTION IS AS FOLLOWS: 1) DURING THE TIME PERIOD NOVEMBER 6, 2002 TO JANUARY 22, 2003, HSBC SECURITIES INACCURATELY REPORTED TO THE TRADE REPORTING A COMPLIANCE ENGINE ("TRACE") THAT IT HAD ACTED AS AN AGENT, WHEN IT HAD ACTUALLY ACTED IN A PRINCIPAL CAPACITY, IN 60 RANDOM TRANSACTIONS REVIEWED BY NASD STAFF. BY REASON OF THE FOREGOING, HSBC SECURITIES VIOLATED NASD MARKETPLACE RULE 6230 AND NASD CONDUCT RULE 2110. 2) DURING THE TIME PERIOD JULY 2002 TO JANUARY 2003, HSBC SECURITIES FAILED TO ESTABLISH AND MAINTAIN AN ADEQUATE SUPERVISORY SYSTEM REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH TRACE REPORTING REQUIREMENTS. BY REASON OF FOREGOING, HSBC SECURITIES VIOLATED NASD CONDUCT RULE 3010(A) AND NASD CONDUCT RULE 2110. Status: Final Sanction Detail: WITH RESPECT TO THE FINDING LISTED IN THE AWC, PLEASE NOTE THAT THIS WAS CAUSED BY A PROGRAMMING ERROR RESULTING FROM HSBC SECURITIES (USA) INC. STAFF DEFAULTING TO THE WRONG CAPACITY DESIGNATION WHEN THE FOIRM'S TRACE REPORTING SOFTWARE WAS FIRST IMPLEMENTED. THIS ISSUE WAS IMMEDIATELY RESOLVED WHEN IT WAS BROUGHT TO OUR ATTENTION. WITH RESPECT TO FINDING LISTED IN THE AWC, THIS WAS ALSO RESOLVED DURING THE 2003 EXAMINATION OF OUR FIRM. REVISED PROCEDURES WERE PREPARED AND GIVEN TO THE NASD EXAMINER WHO CONDUCTED THE REVIEW. THESE PROCEDURES INCLUDE, AMOUNG OTHER THINGS, REVIEWING TRANSACTIONS BY UTILIZING THE "TRADE REPORTING SYSTEM" FUNCTION OF THE TRACE WEB SITE. HSBC SECURITIES WAS FINED $7,500.00. PAYMENT WAS MADE BY BANK CHECK TO THE NASD FOR THE FULL AMOUNT EFFECTIVE JANUARY 15, 2004. Summary: PER THE NASD FINDINGS, DURING THE PERIOD OF NOVEMBER 6, 2002 AND JANUARY 22, 2003, HSBC SECURITIES INACCURATELY REPORTED TO THE TRADE REPORTING AND COMPLIANCE ENGINE ("TRACE") THAT IT HAD ACTED AS A AGENT, WHEN IT HAD ACTUALLY ACTED IN A PRINCIPAL CAPACITY. DURING THE TIME PERIOD JULY 2002 TO JANUARY 2003, HSBC SECURITIES FAILED TO ESTABLISH AND MAINTAIN AN ADEQUATE SUPERVISORY SYSTEM REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH TRACE REPORTING REQUIREMENT. HSBC SECURITIES ACCEPTS AND CONSENTS, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS OR FINDINGS WAS CENSURED AND FINED $7,500.00. WITH RESPECT TO THE INACCURACY REPORTED TO THE TRADE REPORTING AND COMPLIANCE ENGINE ("TRACE"), THIS WAS CAUSED BY A PROGRAMMING ERROR RESULTING FROM HSBC SECURITIES (USA) INC. STAFF DEFAULTING TO THE WRONG CAPACITY DESIGNED WHEN THE FIRM'S TRACE REPORTING SOFTWARE WAS FIRST IMPLEMENTED. THIS ISSUE WAS IMMEDIATELY RESOLVED WHEN IT WAS BROUGHT TO OUR ATTENTION. WITH RESPECT TO FAILURE TO ESTABLISH AND MAINTAIN AND ADEQUATE SUPERVISORY SYSTEM REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH TRACE REPORTING REQUIREMENT, THIS ISSUE WAS ALSO RESLOVED DURING THE 2003 EXAMINATION OF OUR FIRM. REVISED PROCEDURES WERE PREPARED AND GIVEN TO THE NASD EXAMINER WHO CONDUCTED THE REVIEW. THESE PROCEDURES INCLUDE, AMOUNG OTHER THINGS, REVIEWING TRANSACTIONS BY UTILIZING THE "TRADE REPORTING SYSTEM" FUNCTION OF THE TRACE WEB SITE.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT UTILIZED AN ORDER MANAGEMENT SYSTEM (OMS) WHICH ALLOWED THE FIRM TO DESIGNATE CERTAIN ACCOUNTS TO AUTOMATICALLY TRANSMIT TRADE VOLUME TO BLOOMBERG FOR ADVERTISEMENT. THE FINDINGS STATED THAT THE FIRM OPENED A NUMBER OF ACCOUNTS WITH A DEFAULT SETTING THAT RESULTED IN CERTAIN TRADE ACTIVITY BEING SENT TO BLOOMBERG TWICE FOR ADVERTISING. THE FIRM'S PROGRAMMING ERROR CAUSED IT TO OVER-ADVERTISE TRADE VOLUME EXECUTED IN AT LEAST 30 SEPARATE AFFECTED TRADING BOOKS. ONE OF THE FIRM'S TRADERS MANUALLY ENTERED TRADE VOLUME IN CERTAIN SECURITIES FOR ADVERTISING ON BLOOMBERG. THOSE SECURITIES, HOWEVER, WERE ALSO BEING SENT TO BLOOMBERG FOR AUTOMATIC ADVERTISING THROUGH THE FIRM'S OMS. BY VIRTUE OF THE TRADER'S ERRONEOUS MANUAL ADVERTISEMENTS, THE FIRM OVER-ADVERTISED ITS EXECUTED TRADE VOLUME. THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND FINRA RULES, CONCERNING THE ADVERTISEMENT OF TRADE VOLUME. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND THE FIRM PAID A FINE ON FEBRUARY 15,2017 FOR $575,000, AND UNDERTAKES TO REVISE THE FIRM'S SUPERVISORY WRITTEN PROCEDURES. THE MITIGATED MONETARY SANCTION IN THIS MATTER REFLECTS THE FIRM'S SELF-REPORTING OF THE OVER-ADVERTISING VIOLATIONS. Summary: SEE ABOVE

Allegations: THE CHICAGO BOARD OF TRADE ("CBOT") ALLEGED THAT HSBC SECURITIES (USA) INC.("HSBC") VIOLATED REGULATION 332.08. TRADE DATES FOR THE PERIOD OF NOVEMBER 1, 2005 THROUGH DECEMBER 31, 2005 AND FOR THE PERIOD OF FEBRUARY 27, 2006 THROUGH MARCH 24, 2006 CONTAINED AT LEASE ONE DATA ENTRY ERROR. Status: Final Sanction Detail: THE CHICAGO BOARD OF TRADE ("CBOT") ALLEGED THAT HSBC SECURITIES (USA) INC.("HSBC") VIOLATED REGULATION 332.08. TRADE DATES FOR THE PERIOD OF NOVEMBER 1, 2005 THROUGH DECEMBER 31, 2005 AND FOR THE PERIOD OF FEBRUARY 27, 2006 THROUGH MARCH 24, 2006 CONTAINED AT LEASE ONE DATA ENTRY ERROR. HSBC WAS FINED $1800,00 Summary: THE CHICAGO BOARD OF TRADE ("CBOT") ALLEGED THAT HSBC SECURITIES (USA) INC.("HSBC") VIOLATED REGULATION 332.08. TRADE DATES FOR THE PERIOD OF NOVEMBER 1, 2005 THROUGH DECEMBER 31, 2005 AND FOR THE PERIOD OF FEBRUARY 27, 2006 THROUGH MARCH 24, 2006 CONTAINED AT LEASE ONE DATA ENTRY ERROR. HSBC WAS FINED $1800,00

Allegations: THE NASD REGULATION, INC. ALLEGED THAT HSBC SECURITIES (USA) INC. VIOLATED: MARKETPLACE RULES 4632(A), 4620(A)AND 4642(A): MARKETPLACE RULES 4632(A), 6420(A) AND 4642(A); MARKETPLACE RULES 6130(D); CONDUCT RULE 3370; CONDUCT RULE 3360; CONDUCT RULE 2110; CONDUCT RULES 2110 AND 301(B). Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC WAS FINED $7,500.00.

Allegations: THE CBOT ALLEGATED THAT HSBC VIOLATED REGULATION 332.08 IN THAT THE FIRM FAILED TO MAKE ALL TRADE DATA SUBMISSIONS IN A CORRECT MANNER. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC WAS ORDERED TO PAY A FINE IN THE AMOUNT OF $500.00.

Allegations: VIOLATION OF REGULATION 9B.16, BY VITUE OF REGULATION 9B.07 IN THAT PROJECT A TERMINAL OPERATORS EMPLOYED BY HSBC KNOWINGLY CAUSED TRANSACTIONS TO BE ENTERED INTO THE PROJECT A SYSTEM IN WHICH A PROPRIETARY ACCOUNT ASSUME THE OPPOSITE SIDE OF CUSTOMER ORDERS AND THE PROPRIETARY ORDERS WERE ENTERED PRIOR TO THE ORDERS; AND RULE 504.00, IN THAT, BY VIRTUE OF THE ABOVE-REFERENCE VIOLATION. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION OF REGULATION 9B.16 AND RULE 504.00, AS CITED IN THE PRELIMINARY CHANGES, HSBC AGREED TO PAY A FINE OF $20,000 IN SETTLEMENT OF THIS MATTER.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN ELECTRONIC BROKERAGE RECORDS IN NON-ERASABLE AND NON-REWRITABLE FORMAT KNOWN AS THE "WRITE ONCE, READ MANY" (WORM) FORMAT, THAT IS INTENDED TO PREVENT THE ALTERATION OR DESTRUCTION OF BROKER-DEALER RECORDS STORED ELECTRONICALLY. THE FINDINGS STATED THAT THESE REQUIREMENTS ARE AN ESSENTIAL PART OF THE INVESTOR PROTECTION FUNCTION BECAUSE PRESERVATION OF THESE RECORDS IS THE PRIMARY MEANS OF MONITORING COMPLIANCE WITH APPLICABLE SECURITIES LAWS, INCLUDING ANTIFRAUD PROVISIONS AND FINANCIAL RESPONSIBILITY STANDARDS. THE FIRM FAILED TO RETAIN IN WORM FORMAT BROKERAGE ORDER MEMORANDA RECORDS RELATING TO APPROXIMATELY 12.36 MILLION TRANSACTIONS IN PREFERRED EXCHANGE-TRADED FUNDS, EQUITIES, AND FIXED INCOME PRODUCTS. OTHER AFFECTED RECORDS INCLUDED A LIMITED NUMBER OF THE FIRM'S GENERAL LEDGER, CERTAIN INTERNAL AUDIT RECORDS, RISK MANAGEMENT CONTROL RECORDS, UNUSUAL ACTIVITY REPORTS AND CERTAIN POLICY MANUALS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO PROVIDE THE REQUIRED 90-DAY NOTICE TO ITS DESIGNATED EXAMINING AUTHORITY (FINRA), PRIOR TO RETAINING A VENDOR TO PROVIDE ELECTRONIC STORAGE. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO IMPLEMENT AN AUDIT SYSTEM AS REQUIRED FOR THOSE RECORDS IT FAILED TO MAINTAIN IN WORM FORMAT. FINRA FOUND THAT IN CERTAIN INSTANCES, THE FIRM FAILED TO OBTAIN AN ATTESTATION FROM ITS THIRD-PARTY VENDOR THAT IT WILL SUPPLY ELECTRONICALLY STORED RECORDS TO REGULATORY AUTHORITIES IN THE EVENT THE FIRM IS UNABLE TO PROVIDE THE ELECTRONICALLY STORED RECORDS. FINRA ALSO FOUND THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTEN SUPERVISORY PROCEDURES (WSPS) REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE SEC RULE FOR RECORD RETENTION REQUIREMENTS. THE FIRM'S WSPS FAILED TO SPECIFY HOW THE FIRM WOULD SUPERVISE ITS COMPLIANCE WITH RECORD RETENTION REQUIREMENTS UNDER THE RULE. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $1,500,000 AND REQUIRED TO SUBMIT TO FINRA A WRITTEN PLAN OF HOW IT WILL UNDERTAKE TO CONDUCT A COMPREHENSIVE REVIEW OF THE ADEQUACY OF THE RELEVANT POLICIES AND PROCEDURES (WRITTEN AND OTHERWISE), INCLUDING A DESCRIPTION OF REMEDIAL MEASURES LEADING TO FULL COMPLIANCE, RELATING TO THE CONDUCT ADDRESSED IN THE AWC. THEN IF ACCEPTABLE TO FINRA THE FIRM WILL PROMPTLY IMPLEMENT ITS COMPREHENSIVE REVIEW AND CERTIFY IN WRITING TO FINRA THAT IT HAS ADOPTED AND IMPLEMENTED POLICIES AND PROCEDURES DESIGNED TO ENSURE COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND FINRA RULES ADDRESSED IN THE AWC. Summary: HSBC SECURITIES (USA) INC. MADE PAYMENT OF $1,500,000 ON JULY 14, 2017.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM OR WSPSREASONABLY DESIGNED TO SCREEN NON-REGISTERED ASSOCIATED PERSONS FOR STATUTORY DISQUALIFICATION.THE FINDINGS STATED THAT THE FIRM'S WRITTEN PROCEDURES ONLY ADDRESSED FINGERPRINTING AND SCREENING FOR STATUTORY DISQUALIFICATION OF REGISTERED INDIVIDUALS ORTHOSE REQUIRED TO BE REGISTERED. THE PROCEDURES DID NOT REQUIRE THAT NON-REGISTERED ASSOCIATED PERSONS BE FINGERPRINTED AND SCREENED FOR STATUTORY DISQUALIFICATION. THE FIRMALSO FAILED TO ASSIGN PERSONNEL TO IDENTIFY AND SCREEN NON-REGISTERED ASSOCIATED PERSONS.AFTER IDENTIFYING THIS ISSUE, THE FIRM WAS ABLE TO FINGERPRINT AND SCREEN SOME OF THE NON-REGISTERED ASSOCIATED PERSONS. THROUGH THIS PROCESS THE FIRM DID NOT IDENTIFY ANY INDIVIDUALS WHO WERE SUBJECT TO STATUTORY DISQUALIFICATION. HOWEVER, THE FIRM WAS UNABLE TOFINGERPRINT AND SCREEN OTHER INDIVIDUALS BECAUSE THEY WERE NO LONGER ASSOCIATED WITH THEFIRM AND THUS COULD NOT DETERMINE WHETHER THOSE INDIVIDUALS WERE SUBJECT TO STATUTORY DISQUALIFICATION. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $650,000, AND IS REQUIRED TO REVIEW ITS SYSTEMS AND PROCEDURES REGARDING THE IDENTIFICATION, FINGERPRINTING, AND SCREENING OF NON-REGISTERED ASSOCIATED PERSONS TO ENSURE THAT CURRENT SYSTEMS AND PROCEDURES ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH GOVERNING SECURITIES LAWS AND REGULATIONS. THE MONETARY PENALTY WAS PAID ON FEBRUARY 25,2021.

Allegations: ON JANUARY 9, 2017, THE OFFICE OF THE COMPTROLLER OF THE CURRENCY ("OCC") ANNOUNCED THAT IT HAD TERMINATED ITS RESIDENTIAL MORTGAGE SERVICING RELATED CONSENT ORDER AGAINST HSBC BANK USA, N.A. (THE "BANK"), A SUBSIDIARY OF HSBC USA INC. THE OCC TERMINATED THE CONSENT ORDER HAVING FOUND THAT THE BANK HAD SATISFIED ALL OF THE REQUIREMENTS OF THE OCC'S ORIGINALLY ISSUED APRIL 2011 CONSENT ORDER, AND THE FEBRUARY 2013 AND JUNE 2015 AMENDMENTS THERETO. WITH TERMINATION OF THE CONSENT ORDER, THE BUSINESS RESTRICTIONS IMPOSED BY THE OCC ON THE BANK PURSUANT TO THE JUNE 2015 AMENDMENT TO THE CONSENT ORDER ARE ALSO TERMINATED. THE BANK WILL PAY A $32.5 MILLION CIVIL MONEY PENALTY TO THE U.S. TREASURY FOR DEFICIENCIES IN TIMELY COMPLIANCE WITH THE CONSENT ORDER, INCLUDING IDENTIFIED DEFICIENCIES ON APPROXIMATELY 1,700 MORTGAGE LOAN ACCOUNTS RELATIVE TO PAYMENT CHANGE NOTIFICATIONS REQUIRED UNDER APPLICABLE BANKRUPTCY RULES. AN ADDITIONAL CHARGE TO INCOME IN THE AMOUNT OF $27.5 MILLION WAS TAKEN BY THE BANK IN THE FOURTH QUARTER ENDED DECEMBER 31, 2016 RELATED TO THIS MATTER. Status: Final Sanction Detail: N/A Summary: WITHOUT ADMITTING OR DENYING THE VIOLATIONS HSBC BANK USA N.A. IN ACCORDANCE WITH THE SETTLEMENT WILL PAY A FINE IN THE AMOUNT OF $32,500,000

Allegations: CERTAIN CIVIL ALLEGATIONS RELATED TO PAST RESIDENTIAL MORTGAGE ORIGINATION, SERVICING AND FORECLOSURE PRACTICES. Status: Final Sanction Detail: TERMS: $100 MILLION TO BE ALLOCATED AMONG PARTICIPATING FEDERAL AND STATEPARTIES, AND $370 MILLION IN CONSUMER RELIEF. Summary: IN FEBRUARY 2016, HSBC FINANCE CORPORATION, HSBC BANK USA, HSBC MORTGAGE SERVICES INC. AND HSBC NORTH AMERICA HOLDINGS ENTERED INTO AN AGREEMENT WITH THE U.S. DEPARTMENT OF JUSTICE,THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, THE CONSUMER FINANCIAL PROTECTION BUREAU, OTHER FEDERAL AGENCIES ("FEDERAL PARTIES") AND THE STATE ATTORNEYS GENERAL OF 49 STATES AND THE DISTRICT OF COLUMBIA ("STATE PARTIES") TO RESOLVE CIVIL CLAIMS RELATED TO PAST RESIDENTIAL MORTGAGE LOAN ORIGINATION AND SERVICING PRACTICES. THE SETTLEMENT IS SIMILAR TO PRIOR NATIONAL MORTGAGE SETTLEMENTS REACHED WITH OTHER US MORTGAGE SERVICERS AND INCLUDES THE FOLLOWING TERMS: $100 MILLION TO BE ALLOCATED AMONG PARTICIPATING FEDERAL AND STATEPARTIES, AND $370 MILLION IN CONSUMER RELIEF. IN ADDITION, THE SETTLEMENT AGREEMENT SETS FOR THE NATIONAL MORTGAGE SERVICING STANDARDS TO WHICH HSBC U.S. AFFILIATES WILL ADHERE.

Allegations: THE COMPTROLLER OF THE CURRENCY OF THE UNITED STATES OF AMERICA ("COMPTROLLER"), THROUGH HIS NATIONAL BANK EXAMINERS AND OTHER STAFF OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY ("OCC"), AS PART OF AN INTERAGENCY HORIZONTAL REVIEW OF MAJOR RESIDENTIAL MORTGAGE SERVICERS, CONDUCTED AN EXAMINATION OF THE RESIDENTIAL REAL ESTATE MORTGAGE FORECLOSURE PROCESSES OF HSBC BANK USA, N.A., MCLEAN, VIRGINIA ("BANK"). THE OCC IDENTIFIED CERTAIN DEFICIENCIES AND UNSAFE OR UNSOUND PRACTICES IN RESIDENTIAL MORTGAGE SERVICING AND IN THE BANK'S INITIATION AND HANDLING OF FORECLOSURE PROCEEDINGS. THE BANK, BY AND THROUGH ITS DULY ELECTED AND ACTING BOARD OF DIRECTORS ("BOARD"), EXECUTED A "STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER," DATED APRIL 13, 2011 ("STIPULATION AND CONSENT"). BY THIS STIPULATION AND CONSENT, THE BANK HAS CONSENTED TO THE ISSUANCE OF THE CONSENT CEASE AND DESIST ORDER ("ORDER") BY THE COMPTROLLER. THE BANK COMMITTED TO TAKING ALL NECESSARY AND APPROPRIATE STEPS TO REMEDY THE DEFICIENCIES AND UNSAFE OR UNSOUND PRACTICES IDENTIFIED BY THE OCC, AND TO ENHANCE THE BANK'S RESIDENTIAL MORTGAGE SERVICING AND FORECLOSURE PROCESSES. ON JANUARY 9, 2017, THE OFFICE OF THE COMPTROLLER OF THE CURRENCY ("OCC") ANNOUNCED THAT IT HAD TERMINATED ITS RESIDENTIAL MORTGAGE SERVICING RELATED CONSENT ORDER AGAINST HSBC BANK USA, N.A. (THE "BANK"), A SUBSIDIARY OF HSBC USA INC. THE OCC TERMINATED THE CONSENT ORDER HAVING FOUND THAT THE BANK HAD SATISFIED ALL OF THE REQUIREMENTS OF THE OCC'S ORIGINALLY ISSUED APRIL 2011 CONSENT ORDER, AND THE FEBRUARY 2013 AND JUNE 2015 AMENDMENTS THERETO. WITH TERMINATION OF THE CONSENT ORDER, THE BUSINESS RESTRICTIONS IMPOSED BY THE OCC ON THE BANK PURSUANT TO THE JUNE 2015 AMENDMENT TO THE CONSENT ORDER ARE ALSO TERMINATED. THE BANK PAID $32.5 MILLION CIVIL MONEY PENALTY TO THE U.S. TREASURY FOR DEFICIENCIES IN TIMELY COMPLIANCE WITH THE CONSENT ORDER, INCLUDING IDENTIFIED DEFICIENCIES ON APPROXIMATELY 1,700 MORTGAGE LOAN ACCOUNTS RELATIVE TO PAYMENT CHANGE NOTIFICATIONS REQUIRED UNDER APPLICABLE BANKRUPTCY RULES. THE ORDER WAS TERMINATED IN JANUARY OF 2017. Status: Final Sanction Detail: PURSUANT TO THE FRB AND OCC AMENDED CONSENT ORDERS DATED FEBRUARY 28, 2013, HSBC WILL MAKE CASH PAYMENTS TOTALLING $249,901,413. SUCH PAYMENTS WILL BE APPLIED TO A SETTLEMENT FUND AND ALSO BE USED TO PROVIDE OTHER ASSISTANCE TO HELP MORTGAGE BORROWERS. - HSBC BANK USA N.A. IN ACCORDANCE WITH THE SETTLEMENT PAID THE FINE IN THE AMOUNT OF $32,500,000 AND THE ORDER WAS TERMINATED IN JANUARY OF 2017. Summary: THE APRIL 2011 OCC AND FRB CONSENT ORDERS WERE AMENDED, REQUIRING HNAH, HBIO AND HSBC BANK TO PAY $96,540,359 INTO A QUALIFIED SETTLEMENT FUND, ESTABLISHED PURSUANT TO THE AMENDMENT, FROM WHICH PAYMENTS WILL BE MADE ACCORDING TO A DISTRIBUTION PLAN DEVELOPED BY THE FRB AND THE OCC. HNAH, HBIO AND HSBC BANK SHALL ALSO PROVIDE LOSS MITIGATION AND FORECLOSURE PREVENTION TOTALLING $153,361,054. WITHOUT ADMITTING OR DENYING THE VIOLATIONS HSBC BANK USA N.A. IN ACCORDANCE WITH THE SETTLEMENT PAID A FINE IN THE AMOUNT OF $32,500,000 AND THE ORDER WAS TERMINATED IN JANUARY OF 2017.

Allegations: THE EUROPEAN COMMISSION RECENTLY COMPLETED A CARTEL INVESTIGATION INTO THE FOREIGN EXCHANGE ('FOREX') SPOT TRADING MARKET BY IMPOSING FINES ON FIVE FINANCIAL INSTITUTIONS, INCLUDING HSBC HOLDINGS PLC. THE COMMISSION'S INVESTIGATION FOCUSED ON THE TRADING OF THE G10 CURRENCIES. THE COMMISSION'S INVESTIGATION REVEALED THAT SOME TRADERS IN CHARGE OF THE FOREX SPOT TRADING OF G10 CURRENCIES, ACTING ON BEHALF OF THE FINED BANKS, EXCHANGED SENSITIVE INFORMATION AND TRADING PLANS, AND OCCASIONALLY COORDINATED THEIR TRADING STRATEGIES THROUGH AN ONLINE PROFESSIONAL CHATROOM. THE COMMISSION FOUND THAT THESE INFORMATION EXCHANGES ENABLED THE TRADERS TO MAKE INFORMED MARKET DECISIONS ON WHETHER AND WHEN TO SELL OR BUY THE CURRENCIES THEY HAD IN THEIR PORTFOLIOS, AS OPPOSED TO A SITUATION WHERE TRADERS ACTING INDEPENDENTLY FROM EACH OTHER TAKE AN INHERENT RISK IN TAKING THESE DECISIONS. OCCASIONALLY, THESE INFORMATION EXCHANGES ALSO ALLOWED THE TRADERS TO IDENTIFY OPPORTUNITIES FOR COORDINATION, FOR EXAMPLE THROUGH A PRACTICE CALLED "STANDING DOWN", WHEREBY SOME OF THEM WOULD TEMPORARILY REFRAIN FROM TRADING TO AVOID INTERFERING WITH ANOTHER TRADER. HSBC COOPERATED WITH THE INVESTIGATION AND HAS PROVISIONED FOR THE FINE NOTED IN SECTION RESOLUTION DETAIL. Status: Final Sanction Detail: FINE ANNOUNCED BY THE COMMISSION ON 12/2/21. Summary: HSBC HOLDINGS PLC INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE COMMISSION.

Allegations: IN DECEMBER 2016, THE EUROPEAN COMMISION ("THE COMMISSION") ISSUED A DECISION THAT IN EARLY 2007 HSBC, AMONG OTHER BANKS, COLLUDED ON EURO INTEREST RATE DERIVATIVE PRICING ELEMENTS, AND EXCHANGED RELATED SENSITIVE INFORMATION, IN BREACH OF EU ANTITRUST RULES. THE COMMISSION DETERMINED THAT THE DURATION OF HSBC'S INFRINGEMENT WAS 1 MONTH AND FINED HSBC 33,606,000 EUROS. AN APPEALWAS MADE TO THE GENERAL COURT OF THE EUROPEAN UNION, RESULTED IN THE FINE BEING ANNULLED. BOTH HSBC AND THE COMMISSION ARE APPEALING TO THE COURT OF JUSTICE OF THE EUROPEAN UNION. IN JANUARY 2023 THE EU COURT OF JUSTICE UPHELD THE LIABILITY FINDINGS OF THE GENERAL COURT. HSBC HAS APPEALLED TO THE GENERAL COURT CHALLENGING THE FINE IMPOSED BY THE COMMISSION. THAT APPEAL REMAINS PENDING. Status: On Appeal Sanction Detail: HSBC HOLDINGS PLC. IN ACCORDANCE WITH THE SETTLEMENT WILL PAY A FINE IN THE AMOUNT OF 31,739,000, EUROS. HSBC MAINTAINS AN APPEAL BEFORE THE EU GENERAL COURT AGAINST THE FINE. SEE INFORMATION ABOVE REGARDING THE APPEALS BY THE COMMISSION AND HSBC OF THE GENERAL COURT'S SEPTEMBER 2019 JUDGMENT. Summary: THE ORIGINAL FINE ASSESSED AGAINST HSBC WAS ANNULLED. IN JANUARY 2023 THE EUROPEAN COMMISSION RE-IMPOSED A FINE OF 31,739,000 EUROS TO BE PAID BY HSBC, REPLACING THE PRIOR FINE OF 33,606,000 EUROS. HSBC MAINTAINS AN APPEAL BEFORE THE EU GENERAL COURT AGAINST THE FINE.

Allegations: VIOLATION OF SECTION 551.63. OF THE WISCONSIN STATUES. Status: Final Sanction Detail: HSBC SECURITIES (USA) INC. WAS ORDERED TO PAY $4,000.00 AS AN ADMINISTRATIVE ASSESSMENT PURSUANT TO SECTION 551.605 OF THE WISCONSIN STATUES.

Allegations: IN DECEMBER 2016, THE EUROPEAN COMMISSION (THE 'COMMISSION') ISSUED A DECISION THAT IN EARLY 2007 HSBC, AMONG OTHER BANKS, COLLUDED ON EURO INTEREST RATE DERIVATIVE PRICING ELEMENTS, AND EXCHANGED RELATED SENSITIVE INFORMATION, IN BREACH OF EU ANTITRUST RULES. THE COMMISSION DETERMINED THAT THE DURATION OF HSBC'S INFRINGEMENT WAS 1 MONTH AND FINED HSBC 33,606,000 EUROS. HSBC IS CURRENTLY CONSIDERING WHETHER TO APPEAL SUCH DECISION. Status: Final Sanction Detail: HSBC HOLDINGS PLC. IN ACCORDANCE WITH THE SETTLEMENT WILL PAY A FINE IN THE AMOUNT OF 33,606,000, EUROS, SUBJECT TO A POSSIBLE APPEAL. THE FINE IS CONVERTED TO $ 35,958,420 US DOLLARS AS REPORTED ABOVE IN SECTION 12.A. Summary: WITHOUT ADMITTING OR DENYING THE VIOLATIONS, HSBC HOLDINGS PLC. IN ACCORDANCE WITH THE SETTLEMENT WILL PAY A FINE IN THE AMOUNT OF 33,606,000, EUROS, SUBJECT TO A POSSIBLE APPEAL.

Allegations: PURSUANT TO A PLEA AGREEMENT ENTERED INTO WITH THE UNITED STATES ATTORNEY'S OFFICE FOR THE SOUTHERN DISTRICT OF NEW YORK, REPUBLIC NEW YORK SECURITIES CORPORATION ("RNYSC") PLEADED GUILTY IN DECEMBER, 2001 TO A TWO-COUNT FELONY INFORMATION CHARGING ONE COUNT OF CONSPIRACY TO VIOLATE THE FEDERAL SECURITIES AND COMMODITIES LAWS AND ONE COUNT OF VIOLATION OF THE SECURITIES LAWS. Status: Final Sanction Detail: IN CONJUNCTION WITH ITS GUILTY PLEA, "RNYSC" ALSO ENTERED INTO AGREEMENTS WITH EACH OF THE SECURITIES AND EXCHANGE COMMISSION AND THE COMMODITIES FUTURES TRADING COMMISSION UNDER WHICH THOSE AGENCIES ISSUED ADMINISTRATIVE ORDERS REVOKING THE LICENSES THEY HAD PREVIOUSLY GRANTED TO "RNYSC",AND IN THE CASE OF THE CFTC IMPOSING A CIVIL MONETARY PENALTY. SEPARATELY, THE COMMISSION ISSUED A TEMPORARY ORDER EXEMPTING "RNYSC'S" NEW PARENT HSBC, AS WELL AS HSBC ASSET MANAGEMENT FROM THE PROVISIONS OF SECTION 9(A) OF THE INVESTMENT COMPANY ACT. "RNYSC" IS A DORMANT COMPANY AND NO LONGER CONDUCTS ACTIVITIES.

Allegations: THE COMMODITY FUTURES TRADING COMMISSION ("CFTC") AND SECURITIES AND EXCHANGE COMMISSION ("SEC") ISSUED ORDERS FINDING THAT CERTAIN MEMBERS OF THE HSBC GROUP VIOLATED RECORD-KEEPING RULES UNDER THE SECURITIES EXCHANGE ACT AND COMMODITIES EXCHANGE ACT BY FAILING TO PREVENT EMPLOYEES FROM USING UNAPPROVED COMMUNICATIONS CHANNELS (INCLUDING WHATSAAPP AND TEXT MESSAGING) THAT WERE NOT PRESERVED, SURVEILLED OR RETAINED. THE RESOLUTIONS, WHICH COLLECTIVELY INVOLVE HSBC SECURITIES (USA) INC., HSBC BANK USA, N.A. AND HSBC BANK PLC, FOLLOW SETTLEMENTS WITH MORE THAN A DOZEN OTHER FINANCIAL INSTITUTIONS FOLLOWING STREET-WIDE INVESTIGATION. THE FINDINGS, WHICH THE HSBC ENTITIES ADMITTED, WERE BASED ON FAILURE TO RETAIN REQUIRED RECORDS AND NOT ON ANY ALLEGATIONS OF MISCONDUCT BY ANY HSBC EMPLOYEE. THE CFTC ASSESSED A $30 MILLION PENALTY ON THE HSBC ENTITIES COLLECTIVELY, AND THE SEC ASSESSED A PENALTY OF $15 MILLION ON HSBC SECURITIES (USA) INC. EACH AGENCY ALSO REQUIRED VARIOUS ONGOING REMEDIAL UNDERTAKINGS. Status: Final Sanction Detail: THE FIRM IS ORDERED TO CEASE AND DESIST; IS CENSURED, SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER, AND SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $15,000,000.00.

Allegations: THE COMMODITY FUTURES TRADING COMMISSION ("CFTC") AND SECURITIES AND EXCHANGE COMMISSION ("SEC") ISSUED ORDERS FINDING THAT CERTAIN MEMBERS OF THE HSBC GROUP VIOLATED RECORD-KEEPING RULES UNDER THE SECURITIES EXCHANGE ACT AND COMMODITIES EXCHANGE ACT BY FAILING TO PREVENT EMPLOYEES FROM USING UNAPPROVED COMMUNICATIONS CHANNELS (INCLUDING WHATSAAPP AND TEXT MESSAGING) THAT WERE NOT PRESERVED, SURVEILLED OR RETAINED. THE RESOLUTIONS, WHICH COLLECTIVELY INVOLVE HSBC SECURITIES (USA) INC., HSBC BANK USA, N.A. AND HSBC BANK PLC, FOLLOW SETTLEMENTS WITH MORE THAN A DOZEN OTHER FINANCIAL INSTITUTIONS FOLLOWING STREET-WIDE INVESTIGATION. THE FINDINGS, WHICH THE HSBC ENTITIES ADMITTED, WERE BASED ON FAILURE TO RETAIN REQUIRED RECORDS AND NOT ON ANY ALLEGATIONS OF MISCONDUCT BY ANY HSBC EMPLOYEE. THE CFTC ASSESSED A $30 MILLION PENALTY ON THE HSBC ENTITIES COLLECTIVELY, AND THE SEC ASSESSED A PENALTY OF $15 MILLION ON HSBC SECURITIES (USA) INC. EACH AGENCY ALSO REQUIRED VARIOUS ONGOING REMEDIAL UNDERTAKINGS. Status: Final Sanction Detail: THE FIRM IS ORDERED TO CEASE AND DESIST; IS CENSURED, SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER, AND SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $30,000,000.00.

Allegations: 34 BACKING AWAY INCIDENTS DURING THE FOURTH QUARTER OF 2000. Status: Final Sanction Detail: FINED $10,000.00.

Allegations: THE CHICAGO BOARD OF TRADE ("CBOT") ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED REGULATION 3242.01 IN THAT THE FIRM FAILED TO MAKE DELIVERY OF CONTRACT GRADE TWO-YEAR U.S. TREASURY NOTES BY 1:00 P.M., CHICAGO TIME, ON DELIVERY DAY. Status: Final Sanction Detail: THE CHICAGO BOARD OF TRADE ("CBOT") ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED REGULATION 3242.01 IN THAT THE FIRM FAILED TO MAKE DELIVERY OF CONTRACT GRADE TWO-YEAR U.S. TREASURY NOTES BY 1:00 P.M., CHICAGO TIME, ON DELIVERY DAY. HSBC WAS FINED $60,000.00.

Allegations: THE CHICAGO BOARD OF TRADE ("CBOT") ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED REGULATION 332.08. TRADE DATE FOR THE TRADE DATES OF OCTOBER 1, 2006 THROUGH DECEMBER 27, 2006 REFLECTED AN UNACCEPTABLE CTR ERROR RATE. HSBC WAS FINED $1,000.00. Status: Final Sanction Detail: THE CHICAGO BOARD OF TRADE ("CBOT") ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED REGULATION 332.08. TRADE DATE FOR THE TRADE DATES OF OCTOBER 1, 2006 THROUGH DECEMBER 27, 2006 REFLECTED AN UNACCEPTABLE CTR ERROR RATE. HSBC WAS FINED $1,000.00.

Allegations: THE NASD ALLEGED THE FOLLOWING: SEC RULES 10B-10, 17A-3, A7A-4, 200(G) OF REGULATION SHO, 203(B)(1) OF REGULATION SHO, NASD RULES 3010, 3110, 6130, 6955(A) - HSBC SECURITIES (USA) INC. ("HSBC") ACCEPTED SHORT SALE ORDERS IN AN EQUITY SECURITY FROM ANOTHER PERSON, OR AFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT DOCUMENTING THAT IT BORROWED THE SECURITY, OR ENTERED INTO A BONA FIDE ARRANGEMENT TO BORROW THE SECURITY, OR THAT IT HAD REASONABLE GROUNDS TO BELIEVE THAT THE SECURITY COULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATE DELIVERY IS DUE. THE FINDINGS STATED THAT THE FIRM FAILED TO CORRECTLY REPORT SALE TRANSACTIONS TO ACT AS LONG, SHORT OR SHORT EXEMPT, FAILED TO REPORT THE CORRECT EXECUTION TIME AND IN ONE INSTANCE, THE FIRM REPORTED ITS CAPACITY AS PRINCIPAL WHEN IT WAS ACTING AS AGENT. THE FINDINGS ALSO STATED THAT THE FIRM REPORTED TO OATS EXECUTION REPORTS THAT CONTAINED INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA AND EXECUTED SHORT SALE ORDERS AND FAILED TO PROPERLY MARK THE ORDER TICKETS AS SHORT FOR THESE ORDERS. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO PRESERVE FOR A PERIOD OF NOT LESS THAN THREE YEARS, THE FIRST TWO IN AN ACCESSIBLE PLACE, THE MEMORANDUM OF BROKERAGE ORDERS, A CUSTOMER CONFIRMATION AND FAILED TO SHOW THE TIME OF RECEIPT ON THE MEMORANDUM OF A BROKERAGE ORDER. THE NASD FOUND THAT THE FIRM FAILED TO DISCLOSE THE CORRECT CAPACITY AND TO DISCLOSE AVERAGE PRICE ON CUSTOMER CONFIRMATIONS. THE NASD ALSO FOUND THAT THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULES RELATING TO COMPLIANCE WITH ORDER HANDLING, BEST EXECUTION, ANTI-INTIMIDATION AND COORDINATION, SALES TRANSACTIONS, BOOKS AND RECORDS AND FOR MONITORING USE OF FIRM'S BANK. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC SECURITIES (USA) INC. ("HSBC"), CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. HSBC WAS CENSURED AND FINED $27,500.00. Summary: THE NASD ALLEGED THE FOLLOWING: SEC RULES 10B-10, 17A-3, A7A-4, 200(G) OF REGULATION SHO, 203(B)(1) OF REGULATION SHO, NASD RULES 3010, 3110, 6130, 6955(A) - HSBC SECURITIES (USA) INC. ("HSBC") ACCEPTED SHORT SALE ORDERS IN AN EQUITY SECURITY FROM ANOTHER PERSON, OR AFFECTED A SHORT SALE IN AN EQUITY SECURITYFOR ITS OWN ACCOUNT, WITHOUT DOCUMENTING THAT IT BORROWED THE SECURITY, OR ENTERED INTO A BONA FIDE ARRANGEMENT TO BORROW THE SECURITY, OR THAT IT HAD REASONABLE GROUNDS TO BELIEVE THAT THE SECURITY COULD BE BORROWED SO THAT IT COULD BE DELIVERED ON THE DATE DELIVERY IS DUE. THE FINDINGS STATED THAT THE FIRM FAILED TO CORRECTLY REPORT SALE TRANSACTIONS TO ACT AS LONG, SHORT OR SHORT EXEMPT, FAILED TO REPORT THE CORRECT EXECUTION TIME AND IN ONE INSTANCE, THE FIRM REPORTED ITS CAPACITY AS PRINCIPAL WHEN IT WAS ACTING AS AGENT. THE FINDINGS ALSO STATED THAT THE FIRM REPORTED TO OATS EXECUTION REPORTS THAT CONTAINED INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA AND EXECUTED SHORT SALE ORDERS AND FAILED TO PROPERLY MARK THE ORDER TICKETS AS SHORT FOR THESE ORDERS. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO PRESERVE FOR A PERIOD OF NOT LESS THAN THREE YEARS, THE FIRST TWO IN AN ACCESSIBLE PLACE, THE MEMORANDUM OF BROKERAGE ORDERS, A CUSTOMER CONFIRMATION AND FAILED TO SHOW THE TIME OF RECEIPT ON THE MEMORANDUM OF A BROKERAGE ORDER. THE NASD FOUND THAT THE FIRM FAILED TO DISCLOSE THE CORRECT CAPACITY AND TO DISCLOSE AVERAGE PRICE ON CUSTOMER CONFIRMATIONS. THE NASD ALSO FOUND THAT THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULES RELATING TO COMPLIANCE WITH ORDER HANDLING, BEST EXECUTION, ANTI-INTIMIDATION AND COORDINATION, SALES TRANSACTIONS, BOOKS AND RECORDS AND FOR MONITORING USE OF FIRM'S BANK.

Allegations: THE NASD REGULATION INC. ("NASD") ALLEGED THAT HSBC SECURITIES (USA) INC. VIOLATED NASD RULE 2110 - RESPONDENT MEMBER FAILED WITHIN 90 SECONDS AFTER EXECUTION TO TRANSMIT TO THE NASDAQ MARKET CENTER (NMC) LAST SALE REPORTS OF TRANSACTION IN CQS SECURITIES. Status: Final Sanction Detail: THE NASD REGULATION INC. ("NASD") ALLEGED THAT HSBC SECURITIES (USA) INC. VIOLATED NASD RULE 2110 - RESPONDENT MEMBER FAILED WITHIN 90 SECONDS AFTER EXECUTION TO TRANSMIT TO THE NASDAQ MARKET CENTER (NMC) LAST SALE REPORTS OF TRANSACTION IN CQS SECURITIES. Summary: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC SECURITIES (USA) INC. WAS FINED $5,000.00.

Allegations: (1) VIOLATION OF NYSE RULE 476(A)(6) FOR ENGAGING IN CONDUCT INCONSISTENT WITH JUST AND EQUITABLE PRINCIPLES OF TRADE BY: (A) RECOMMENDING AND SELLING LIBOR CDS TO CUSTOMERS FOR WHOM SUCH PRODUCTS WERE UNSUITABLE; (B) FAILING TO ACCURATELY ADVISE CUSTOMERS ABOUT THE RISKS ASSOCIATED WITH THE LIBOR CDS; AND/OR (C) MAKING MATERIAL MISREPRESENTATIONS REGARDING CERTAIN MATERIAL FEATURES OF THE LIBOR CDS AND/OR THE MANNER IN WHICH THE PRODUCTS WERE LIKELY TO PERFORM. (2) VIOLATION OF NYSE RULE 401(A) BY FAILING TO ADHERE TO PRINCIPLES OF GOOD BUSINESS PRACTICE BY RECOMMENDING AND SELLING THE LIBOR CD PRODUCTS TO CLIENTS FOR WHOM THEY WERE NOT SUITABLE. (3) VIOLATION OF NYSE RULE 342(A) AND (B) BY: (A) FAILING TO ESTABLISH AND MAINTAIN APPROPRIATE PROCEDURES TO REASONABLY SUPERVISE WHETHER THE SALE OF CALLABLE LIBOR CDS WERE SUITABLE FOR ITS CUSTOMERS, AND (B) FAILING TO ADEQUATELY SUPERVISE ITS PERSONNEL IN ORDER TO REASONABLY DETECT AND PREVENT MISREPRESENTATIONS REGARDING MATERIAL FEATURES OF LIBOR CDS, AND/OR THE MANNER IN WHICH THEY WERE LIKELY TO PERFORM. Status: Final Sanction Detail: CENSURE AND FINE IN THE AMOUNT OF $500,000 AND AN UNDERTAKING REQUIRING THE FIRM TO REVIEW THE PURCHASES OF THE OUTSTANDING LIBOR CDS (THAT EXISTED AS OF JUNE 1, 2007) AND OFFERA REMEDIATION PLAN, REVIEWED AND APPROVED BY NYSE ENFORCEMENT, IN ACCORDANCE WITH THE TERMS OF THE STIPULATION AND COSENT TO PENALTY. Summary: THE NYSE HEARING BOARD RENDERED A DECISION ON SEPTEMBER13, 2007 WITH REGARD TO THE STIPULATION OF FACTS AND CONSENT TO PENALTY ENTERED INTO BETWEEN THE FIRM AND THE DIVISION OF ENFORCEMENT OF NYSE REGULATION. THE DECISION BECAME FINAL AT THE CLOSE OF BUSINESS ON OCTOBER 8, 2007. THE FIRM MUST OFFER ITS REMEDIATION PLAN TO NYSE ENFORCEMENT WITHIN 30 DAYS OF THE THE DATE ON WHICH THE DECISION BECAME FINAL. THE FIRM IS REQUIRED TO PAY ITS FINE WITHIN 45 DAYS OF THE DATE ON WHICH THE DECISION BECAME FINAL.

Allegations: CHICAGO BOARD OF TRADE ALLEGES THAT HSBC SECURITIES (USA) INC. (A) ENGEGED IN THE EXECUTION OF AN EFP TRANSACTION WITHOUT A BONA FIDE CASH COMPONENT AND (B) THE FIRM EXECUTED TWO CONTINGENT EFP TRANSACTIONS,, IN WHICH THE CASH EXCHAGED CORRELATED TO THE NET OF TWO FUTURES TRANSACTIONS. Status: Final Sanction Detail: HSBC SECURITIES (USA) INC. WAS FINED IN THE AMOUNT OF $30,000. THE FIRM WAS REQUIRED TO PAY ITS FINE WITHIN 30 DAYS OF THE DATE ON WHICH THE DECISION BECAME FINAL. Summary: IN ORDER TO ENSURE THAT THE TRADING STAFF ("THE STAFF") ARE KNOWLEDGEABLE ABOUT CBOT EFP RULES, THE FIRM HAS IMPLETMENTED AN EFP TRAINING.

Allegations: FINRA ALLEGES THAT HSBC SECURITIES VIOLATED SEC RULE 17A-3, NASD RULES 2110, 6230(A), 6230(C)(8) - FAILURE TO REPORT TRACE TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES EXECUTED ON A BUSINESS DAY DURING TRACE SYSTEM HOURS WITHIN 15 MINUTES OF THE TIME OF EXECUTION; FAILED TO REPORT THE CORRECT TIME OF TRADER EXECUTION FOR TRACE-ELIGIBLE SECURITIES; FAILED TO SHOW THE CORRECT TIME OF EXECUTION ON THE MEMORANDUM OF TRACE-ELIGIBLE SECURITIES ORDERS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC SECURITIES (USA) INC.("HSBC")WAS CENSURED AND FINED $12, 500.00.

Allegations: FINRA ALLEGES THAT HSBC SECURITIES (USA) INC. VIOLATED NASD RULES 2110 AND 3010. DURING THE PERIOD JANUARY 2004 THROUGH JUNE 2006, CUSTOMERS WHO MAINATINED ESCROW ACCOUNTS WITH THE FIRM'S BANK AFFILIATE WERE CHARGED COMMISSIONS FOR FIXED INCOME SECURITIES TRADES EXECUTED BY THE FIRM ON THEIR BEHALF, WHICH WERE HIGHER THAN THE COMMISSIONS THEY WERE CHARGED IN THE PAST AND IN CERTAIN INSTANCES, HIGHER THAN INDUSTRY STANDARDS. THE FIRM FAILED TO TAKE ADEQUATE STEPS TO ASSESS THE FAIRNESS OF THE COMMISSIONS. THE FIRM LACKED ADQUATE WRITTEN GUIDELINES FOR MARK-UPS AND COMMISSIONS ON TRADES FOR FIXED INCOME PRODUCTS, AND ALSO FAILED TO ESTABLISH AND MAINTAIN ADQUATE PROCEDURES TO MONITOR THE APPROPRIATENESS OF COMMISSIONS CHARGED THESE CUSTOMERS IN THAT THE FIRM (A) FAILED TO ESTABLISH ADEQUATE WRITTEN GUIDELINES FOR MARK-UPS AND COMMISSIONS ON FIXED INCOME PRODUCTS (B) FAILED TO GIVE ADEQUATE GUIDANCE IN REFERENCE TO DETRMINING WHAT IS A FAIR MARK-UP OR COMMISSION ON FIXED INCOME PRODUCTS (C) FAILED TO INCLUDE TRADES EXECUTED FOR CUSTOMERS IN BRANCH EXAMINATION REVIEWS (D) FAILED TO ESTABLISHED REASONABLE PROCEDURES FOR MONITORING FIXED INCOME SECURITY MARK-UPS AND COMMISSIONS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC SECURITIES (USA) INC. WAS CENSURED AND FINED $200,000.

Allegations: FINRA ALLEGES THAT HSBC SECURITIES (USA) INC. ("HSBC")VIOLATED ARTICLE VI, SECTION 2 AND SCHEDULE A, SECTION 1 OF THR NASD BY LAWS AND NASD RULE 2110: FAILURE TO INCLUDE TRANSACTIONS FOR CERTAIN COVERED SECURITIES, SUCH AS TRACE-ELIGIBLE SECURITIES, MUNICIPAL SECURITIES SUBJECT TO MSRB REPORTING REQUIREMENTS AND COVERED OPTIONS CONTRACTS, ON ITS TRADING ACTIVITY FEE SELF-REPORTING FORMS FOR CERTAIN ACCOUNTS BETWEEN SEPTEMBER 2003 AND DECEMBER 2006. AS A RESULT, THE REQUIRED TRADING ACTIVITY FEES WERE NOT PAID FOR THESE TRANSACTIONS, SPECIFICALLY, DURING THIS PERIOD HSBC UNDERPAID APPROXIMATELY $28,00.000 IN TRADING ACTIVITY FEES. ONCE THE ERROR WAS DISCOVERED BY HSBC, HSBC SUBSEQUENTLY SUBMITTED CORRECT TRADING ACTIVITY FEE SELF-REPORTING FORMS AND LATER SUBMITTTED AMENDED FORMS AND THE ADDITIONAL FEES TO CORRECT THE PREVIOUS ERRORS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC SECURITIES (USA) INC. WAS FINED $5,000.

Allegations: NASD RULES 2110, 6230(A) - FINRA ALLEGES THAT HSBC SECURITIES (USA) INC. FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION. THIS CONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF NASD RULE 6230(A) AND A PATTERN OR PRACTICE OF LATE REPORTING WITHOUT EXCEPTIONAL CIRCUMSTANCES IN VIOLATION OF NASD RULE 2110. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS,HSBC SECURITIES (USA) INC.CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. HSBC SECURITIES (USA)INC. WAS SENSURED AND FINED $20,000.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA)INC. ("HSBC") VIOLATED RULE 6955(A): HSBC FAILED TO TIMELY REPORT TO THE ORDER AUDIT TRAIL SYSTEM (OATS) REPORTABLE ORDER EVENTS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC WAS FINED $12,500.00.

Allegations: ON MAY 20, 2010, THE FIRM SUBMITTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT IN WHICH HSI, WITHOUT ADMITTING OR DENYING GUILT, CONSENTED TO FINDINGS THAT IT: (1) VIOLATED NASD CONDUCT RULES 3010(A) AND (B) AND 2110 BY (A) FAILING TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND WRITTEN PROCEDURES REGARDING THE SALE OF CMOS TO CUSTOMERS THAT WERE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS AND WITH FINRA RULES; AND (B) FAILING TO ESTABLISH AND MAINTAIN A SYSTEM OF WRITTEN PROCEDURES REASONABLY DESIGNED TO SUPERVISE WHETHER THE SALES OF CMOS WERE SUITABLE FOR ITS CUSTOMERS AND THE ATTENDED RISKS OF THE PRODUCTS WERE FULLY EXPLAINED WHENEVER A REGISTERED REPRESENTATIVE RECOMMENDED A CMO INVESTMENT; (2) DID NOT COMPLY WITH NASD IM-2210-8 WHICH REQUIRES FIRMS TO OFFER CERTAIN EDUCATIONAL MATERIALS BEFORE THE SALE OF A CMO TO ANY PERSON OTHER THAN AN INSTITUTIONAL INVESTOR AND WHILE THE FIRM DID OFFER A BROCHURE, THE BROCHURE DID NOT COMPLY WITH THE CONTENTS STANDARDS OF NASD CONDUCT RULE 2210(D)(1) AND IM-2210-8; AND (3) VIOLATED NASD CONDUCT RULE 2310 AND 2110 BY RECOMMENDING AND SELLING INVERSE FLOATER CMOS TO CUSTOMERS FOR WHOM SUCH PRODUCTS WERE UNSUITABLE. HSI CONSENTED TO THE IMPOSITION BY FINRA OF A SANCTION OF A CENSURE AND A $375,000 FINE. FINRA ACKNOWLEDGED THAT, INDEPENDENT OF THE IMPOSED SANCTION, IMPACTED CUSTOMERS HAVE RECEIVED FULL RESTITUTION FROM THE FIRM. Status: Final Sanction Detail: ON MAY 20, 2010, THE FIRM SUBMITTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT IN WHICH HSI, WITHOUT ADMITTING OR DENYING GUILT, CONSENTED TO FINDINGS THAT IT: (1) VIOLATED NASD CONDUCT RULES 3010(A) AND (B) AND 2110 BY (A) FAILING TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND WRITTEN PROCEDURES REGARDING THE SALE OF CMOS TO CUSTOMERS THAT WERE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS AND WITH FINRA RULES; AND (B) FAILING TO ESTABLISH AND MAINTAIN A SYSTEM OF WRITTEN PROCEDURES REASONABLY DESIGNED TO SUPERVISE WHETHER THE SALES OF CMOS WERE SUITABLE FOR ITS CUSTOMERS AND THE ATTENDED RISKS OF THE PRODUCTS WERE FULLY EXPLAINED WHENEVER A REGISTERED REPRESENTATIVE RECOMMENDED A CMO INVESTMENT; (2) DID NOT COMPLY WITH NASD IM-2210-8 WHICH REQUIRES FIRMS TO OFFER CERTAIN EDUCATIONAL MATERIALS BEFORE THE SALE OF A CMO TO ANY PERSON OTHER THAN AN INSTITUTIONAL INVESTOR AND WHILE THE FIRM DID OFFER A BROCHURE, THE BROCHURE DID NOT COMPLY WITH THE CONTENTS STANDARDS OF NASD CONDUCT RULE 2210(D)(1) AND IM-2210-8; AND (3) VIOLATED NASD CONDUCT RULE 2310 AND 2110 BY RECOMMENDING AND SELLING INVERSE FLOATER CMOS TO CUSTOMERS FOR WHOM SUCH PRODUCTS WERE UNSUITABLE. HSI CONSENTED TO THE IMPOSITION BY FINRA OF A SANCTION OF A CENSURE AND A $375,000 FINE. FINRA ACKNOWLEDGED THAT, INDEPENDENT OF THE IMPOSED SANCTION, IMPACTED CUSTOMERS HAVE RECEIVED FULL RESTITUTION FROM THE FIRM.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED NASD RULES 2110, 4632, 4632(A) 6130(D): THE FIRM FAILED WITHIN 90 SECONDS AFTER EXECUTION TO TRANSMIT TO THE FIRM/NASDAQ TRADE REPORTING FACILITY (FINRA/NASDAQ TRF)105 LAST SALE REPORTS OF TRANSACTIONS IN DESIGNATED SECURITIES. THE FIRM REPORTED TO THE FINRA/NASDAQ TRF 23 LAST SALE REPORTS OF TRANSACTIONS IN DESIGNATED SECURITIES IT WAS NOT REQUIRED TO REPORT. THE FIRM FAILED TO REPORT TO THE FINRA/NASDAQ TRF THE CORRECT TIME OF EXECUTION FOR 79 TRANSACTIONS IN REPORTABLE SECURITIES. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC WAS FINED $22,500.00.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA) INC. VIOLATED FINRA RULES 2010, 6730(A), NASD RULES 6230(B), 6230(C)(6): - HSBC SECURITIES (USA) INC. FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) THE CORRECT CONTRA-PARTY'S IDENTIFIER FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES; THE FIRM REPORTED INTER-DEALER TRANSACTIONS AS CUSTOMER TRANSACTIONS. THE FIRM FAILED TO REPORT TO TRACE TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES THAT IT WAS REQUIRED TO REPORT. THE FIRM FAILED TO REPORT NUMEROUS TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES TO TRACE WITHIN 15 MINUTES OF THE EXECUTION TIME. THIS CONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF FINRA RULE 6730(A) AND A PATTERN OR PRACTICE OF LATE REPORTING WITHOUT EXCEPTIONAL CIRCUMSTANCES IN VIOLATION OF FINRA RULE 2010. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. HSBC WAS CENSURED AND FINED $30,000.00.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA) INC. FAILED TO REPORT TO THE FINRA/NASDAQ TRADE REPORTING FACILITY THE CORRECT SYMBOL INDICATING WHETHER THE TRANSACTION WAS A BUY, SELL, SELL SHORT OR CROSS FOR TRANSACTIONS IN REPORTABLE SECURITIES. FINRA RULE 7230A(D). Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC SECURITIES (USA) INC. WAS FINED $10,000.00.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC")VIOLATED FINRA RULES 6380(A), 6622(B), 7450(A), NASD RULE 6955(A) - HSBC SECURITIES (USA)INC. FAILED TO TIMELY REPORT REPORTABLE ORDER EVENTS (ROES) TO THE ORDER AUDIT TRAIL SYSTEM (OATS); REPORTED EXECUTION OR COMBINED ORDER/EXECUTION REPORTS THAT CONTAINED INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA; TRANSMITTED ROUTE OR COMBINED ORDER/ROUTE REPORTS TO OATS THAT OATS WAS UNABLE TO LINK TO THE RELATED ORDER ROUTED TO NASDAQ OR THE CORRESPONDING NEW ORDER TRANSMITTED BY THE DESTINATION MEMBER FIRM DUE TO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA. FINRA ALLEGED THAT HSBC FAILED TO TRANSMIT ROES TO OATS; TRANSMITTED REPORTS TO OATS THAT CONTAINED INACCURATE DESTINATION CODES. HSBC FAILED, WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMIT LAST SALE REPORTS OF TRANSACTIONS IN DESIGNATED SECURITIES TO THE FINRA/NASDAQ TRADE REPORTING FACILITY (FNTRF) AND FAILED, WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMIT LAST SALE REPORTS OF TRANSACTIONS IN OTC EQUITY SECURITIES TO THE OTC REPORTING FACILITY. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. HSBC WAS CENSURED AND FINED $45,000.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED FINRA RULES 2010, 6730(A), 6760(B), NASD RULE 3010 - HSBC SECURITIES (USA) INC. SERVED AS THE MANAGING UNDERWRITER OF A DISTRIBUTION OR OFFERING, OTHER THAN A SECONDARY OFFERING, AND FAILED TO REPORT SUCH DISTRIBUTION OR OFFERING TO FINRA MARKET OPERATIONS WITHIN THE PRESCRIBED TIME FRAME. HSBC'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, REGULATIONS AND FINRA RULES CONCERNING FINRA RULE 6760(B). FINRA ALLEGED THAT HSBC FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) S1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OF THE EXECUTION TIME. THIS CONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF FINRA RULE 6730(A) AND A PATTERN OR PRACTICE OF LATE REPORTING WITHOUT EXCEPTIONAL CIRCUMSTANCES IN VIOLATIONS OF FINRA RULE 2010. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. HSBC WAS CENSURED AND FINED $70,000 AND WILL REVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING FINRA RULE 6760(B) WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED THE SECURITIES EXCHANGE ACT OF 1934 RULE 17A-4(B)(4), FINRA RULES 2010, 8211, 8213, NASD RULES 2110, 2711(H)(2), 3110, 8211, 8213: THE HSBC'S MIDDLE OFFICE SYSTEM ERRONEOUSLY LEFT OFF SHORT SALE INDICATORS WHEN COMMUNICATING WITH ITS BACK OFFICE SYSTEM, WHICH REPORTED HSBC'S BLUE SHEETS. AS A RESULT, HSBC MISREPORTED SHORT SALE TRANSACTIONS AS LONG SALES ON ITS BLUE SHEETS DURING A FOUR-YEAR PERIOD. HSBC FAILED TO DELIVER PROSPECTUSES OR OFFERING MEMORANDA THAT WERE REQUIRED TO BE DELIVERED IN CONNECTION WITH FIXED INCOME TRANSACTIONS. HSBC EXPERIENCED A BREAKDOWN IN ITS AUTOMATED FEEDS, RESULTING IN FAILURE TO APPEND CERTAIN INVESTMENT BANKING DISCLOSURES TO ITS RESEARCH REPORTS. IN ADDITION, HSBC LEARNED THAT IT HAD ALSO FAILED TO INCLUDE CERTAIN DEBT OFFERINGS IN THE DEFINITION OF INVESTMENT BANKING THAT WAS USED TO DETERMINE THE APPROPRIATE DISCLOSURES FOR ITS RESEARCH REPORTS UP UNTIL THAT TIME. AS A RESULT OF THESE DEFICIENCIES, HSBC ISSUED EQUITY RESEARCH REPORTS WITHOUT REQUIRED DISCLOSURES. MOREOVER, DUE TO INCORRECT MAPPING OF COMPANY IDENTIFIERS, SOME OF THE RESEARCH REPORTS INITIALLY FAILED TO CONTAIN PROPER DISCLOSURES. DESPITE ITS POLICY OF DISABLING TEXT MESSAGING ON EMPLOYEE BLACKBERRIES, CERTAIN NON-TECHNOLOGY EMPLOYEES HAD BLACKBERRIES WITH INBOUND TEXTING FUNCTIONALITY. HSBC LATER TOOK STEPS TO ELIMINATE THIS FUNCTIONALITY. HOWEVER, SOME REGISTERED EMPLOYEES STILL HAD BLACKBERRIES WITH TEXTING CAPABILITY. HSBC FAILED TO RETAIN BLACKBERRY TEXT MESSAGES RECEIVED BY CERTAIN EMPLOYEES. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. HSBC WAS CENSURED AND FINED $250,000. HSBC SATISFIED THE CRITERIA NECESSARY TO RECEIVE CREDIT FOR EXTRAORDINARY COOPERATION. IN LIGHT OF ITS EXTRAORDINARY COOPERATION, HSBC RECEIVED A REDUCED FINE.

Allegations: FINRA ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED SEC RULE 204(A)(2), SEC RULES 200(G), 203(B)(3) OF REGULATION SHO, FINRA RULES 2010, 6624, NASD RULE 3010 - HSBC HAD A FAIL-TO-DELIVER POSITION AT A REGISTERED CLEARING AGENCY IN A THRESHOLD SECURITY FOR 13 CONSECUTIVE SETTLEMENT DAYS AND FAILED TO IMMEDIATELY THEREAFTER CLOSE OUT THE FAIL-TO-DELIVER POSITION BY PURCHASING SECURITIES OF LIKE KIND AND QUANTITY. HSBC CONTINUED TO HAVE A FAIL-TO-DELIVER POSITION IN THE SECURITY AT THE REGISTERED CLEARING AGENCY ON 79 ADDITIONAL SETTLEMENT DAYS, WHICH FAILED TO CLOSE OUT WHEN REQUIRED. HSBC HAD FAIL-TO-DELIVER POSITIONS AT A REGISTERED CLEARING AGENCY IN THE SECURITY THAT RESULTED FROM A SALE OF A SECURITY THAT THE SELLER WAS DEEMED TO OWN PURSUANT TO §242.200 AND INTENDED TO DELIVER ONCE ALL RESTRICTIONS ON DELIVERY HAD BEEN REMOVED, AND DID NOT CLOSE THE FAIL-TO-DELIVER POSITIONS BY PURCHASING SECURITIES OF LIKE KIND AND QUANTITY WITHIN THE TIME FRAME PRESCRIBED BY SEC RULE 204(A)(2). HSBC ACCEPTED ORDERS IN DEEMED TO OWN OVER-THE-COUNTER (OTC) EQUITY SECURITIES AND FAILED TO PROPERLY MARK THE ORDERS AS SHORT AND AS A RESULT, HSBC EXECUTED SHORT SALE TRANSACTIONS AND FAILED TO REPORT EACH OF THESE TRANSACTIONS TO THE OTC REPORTING FACILITY WITH A SHORT SALE INDICATOR. HSBC'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, REGULATIONS AND FINRA RULES CONCERNING FINRA RULES 6182 AND 6624 (TRADE REPORTING OF SHORT SALES) AND SEC RULES 200(G)(ORDER MARKING), 203(A) (LONG SALES), 203(B)(1) (LOCATE REQUIREMENT), 203(B)(3) (THRESHOLD CLOSE OUT REQUIREMENT), AND 204 (CLOSE OUT REQUIREMENT). Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. HSBC WAS CENSURED, FINED $65,000 AND REQUIRED TO REVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING FINRA RULES 6182 AND 6624 (TRADE REPORTING OF SHORT SALES) AND SEC RULES 200(G)(ORDER MARKING), 203(A) (LONG SALES), 203(B)(1) (LOCATE REQUIREMENT), 203(B)(3) (THRESHOLD CLOSE OUT REQUIREMENT), AND 204 (CLOSE OUT REQUIREMENT) WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC.

Allegations: ON MARCH 25, 2014,A PANEL OF THE CHICAGO BOARD OF TRADE BUSINESS CONDUCT COMMITTEE ("PANEL") FOUND THAT ON JUNE 3, 2011, HSBC EXECUTED A BLOCK TRADE IN THE SEPTEMBER 2011 FIVE-YEAR US TREASURY NOTE FUTURES CONTRACTS, AND FAILED TO REPORT THE TRADE TO THE EXCHANGE WITHIN FIVE MINUTES. THE PANEL CONCLUDED THAT HSBC THEREBY VIOLATED CBOT RULE 526.F. Status: Final Sanction Detail: HSBC SECURITIES (USA) INC. IN ACCORDANCE WITH THE SETTLEMENT PAID A FINE IN THE AMOUNT OF $25,000. Summary: WITHOUT ADMITTING OR DENYING THE RULE VIOLATIONS UPON WHICH THE PENALTY IS BASED, HSBC SECURITIES (USA) INC. IN ACCORDANCE WITH THE SETTLEMENT PAID A FINE IN THE AMOUNT OF $25,000.

Allegations: FINRA ALLEGED THAT HSBC VIOLATED FINRA RULE 6730(B)(2) AND FINRA RULE 2010. WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) LARGE BLOCK S1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION, FAILED TO REPORT TO TRACE S1 CUSTOMER TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES THAT IT WAS REQUIRED TO REPORT, AND FAILED TO REPORT TO TRACE INTERDEALER TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES THAT IT WAS REQUIRED TO REPORT. Status: Final Sanction Detail: FINRA ALLEGED THAT HSBC VIOLATED FINRA RULE 6730(B)(2) AND FINRA RULE 2010. WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) LARGE BLOCK S1 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION, FAILED TO REPORT TO TRACE S1 CUSTOMER TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES THAT IT WAS REQUIRED TO REPORT, AND FAILED TO REPORT TO TRACE INTERDEALER TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES THAT IT WAS REQUIRED TO REPORT. Summary: WITHOUT ADMITTING OR DENYING THE FINDINGS,HSBC WAS CENSURED AND FINED $37,500.

Allegations: FINRA ALLEGED THAT HSBC VIOLATED FINRA RULE 7450 AND SEC RULE 10B-10. WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT TRANSMITTED REPORTABLE ORDER EVENTS (ROES) THAT WERE REJECTED AND REPAIRABLE. AS A RESULT, HSBC FAILED TO REPAIR ROES DURING A REVIEW PERIOD THAT WERE REJECTED BY THE ORDER AUDIT TRAIL SYSTEM (OATS) FOR CONTEXT OR SYNTAX ERRORS AND WERE REPAIRABLE; FAILED TO REPAIR A PORTION OF THE REJECTED ROES WITHIN THE REQUIRED FIVE BUSINESS DAYS; AND FAILED TO POPULATE THE CORRECT REJECTED ROE ID. THE FINDINGS STATED THAT HSBC TRANSMITTED TO OATS ROUTE OR COMBINED ORDER/ROUTE REPORTS THAT THE OATS SYSTEM WAS UNABLE TO LINK TO THE CORRESPONDING NEW ORDER TRANSMITTED BY THE DESTINATION MEMBER FIRM DUE TO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA. HSBC FAILED TO TIMELY REPORT ROES TO OATS; SUBMITTED EXECUTION OR COMBINED ORDER/EXECUTION REPORTS WHICH OATS WAS UNABLE TO LINK TO THE EXECUTION REPORTS TO THE RELATED TRADE REPORTS DUE TO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED INFORMATION; SUBMITTED EXECUTION OR COMBINED ORDER/EXECUTION REPORTS THAT IT WAS NOT REQUIRED TO REPORT; SUBMITTED ROUTE OR COMBINED ORDER/ROUTE REPORTS WHICH OATS WAS UNABLE TO LINK TO THE RELATED ORDER IN THE NEW YORK STOCK EXCHANGE DUE TO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA; SUBMITTED ROUTE OR COMBINED ORDER/ROUTE REPORTS WITH INCORRECT DESTINATION CODES; SUBMITTED ROUTE OR COMBINED ORDER/ROUTE REPORTS WHICH OATS WAS UNABLE TO MATCH WITH THE IDENTIFIED RECEIVING FIRM'S RELATED NEW ORDER REPORT; FAILED TO PROPERLY APPEND THE SPECIAL HANDLING CODE OF "CNH" (CASH NOT HELD) TO ORDERS; AND FAILED TO SUBMIT FOR ORDERS A REQUIRED COMBINED ORDER/EXECUTION REPORT TO OATS FOR ORDERS INVOLVING ERROR CORRECTIONS. THE HSBC ALSO FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMER ITS CORRECT CAPACITY IN THE TRANSACTION. Status: Final Sanction Detail: FINRA ALLEGED THAT HSBC VIOLATED FINRA RULE 7450 AND SEC RULE 10B-10. WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT TRANSMITTED REPORTABLE ORDER EVENTS (ROES) THAT WERE REJECTED AND REPAIRABLE. AS A RESULT, HSBC FAILED TO REPAIR ROES DURING A REVIEW PERIOD THAT WERE REJECTED BY THE ORDER AUDIT TRAIL SYSTEM (OATS) FOR CONTEXT OR SYNTAX ERRORS AND WERE REPAIRABLE; FAILED TO REPAIR A PORTION OF THE REJECTED ROES WITHIN THE REQUIRED FIVE BUSINESS DAYS; AND FAILED TO POPULATE THE CORRECT REJECTED ROE ID. THE FINDINGS STATED THAT HSBC TRANSMITTED TO OATS ROUTE OR COMBINED ORDER/ROUTE REPORTS THAT THE OATS SYSTEM WAS UNABLE TO LINK TO THE CORRESPONDING NEW ORDER TRANSMITTED BY THE DESTINATION MEMBER FIRM DUE TO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA. HSBC FAILED TO TIMELY REPORT ROES TO OATS; SUBMITTED EXECUTION OR COMBINED ORDER/EXECUTION REPORTS WHICH OATS WAS UNABLE TO LINK TO THE EXECUTION REPORTS TO THE RELATED TRADE REPORTS DUE TO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED INFORMATION; SUBMITTED EXECUTION OR COMBINED ORDER/EXECUTION REPORTS THAT IT WAS NOT REQUIRED TO REPORT; SUBMITTED ROUTE OR COMBINED ORDER/ROUTE REPORTS WHICH OATS WAS UNABLE TO LINK TO THE RELATED ORDER IN THE NEW YORK STOCK EXCHANGE DUE TO INACCURATE, INCOMPLETE OR IMPROPERLY FORMATTED DATA; SUBMITTED ROUTE OR COMBINED ORDER/ROUTE REPORTS WITH INCORRECT DESTINATION CODES; SUBMITTED ROUTE OR COMBINED ORDER/ROUTE REPORTS WHICH OATS WAS UNABLE TO MATCH WITH THE IDENTIFIED RECEIVING FIRM'S RELATED NEW ORDER REPORT; FAILED TO PROPERLY APPEND THE SPECIAL HANDLING CODE OF "CNH" (CASH NOT HELD) TO ORDERS; AND FAILED TO SUBMIT FOR ORDERS A REQUIRED COMBINED ORDER/EXECUTION REPORT TO OATS FOR ORDERS INVOLVING ERROR CORRECTIONS. THE HSBC ALSO FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMER ITS CORRECT CAPACITY IN THE TRANSACTION. Summary: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC WAS CENSURE AND FINED $22,500(COMPRISED OF $20,000 FOR OATS VIOLATIONS AND $2,500 FOR THE SEC RULE 10B-10 VIOLATIONS).

Allegations: HSBC ASSIGNED INCORRECT CUSTOMER TYPE INDICATOR CODES TO FUTURES ACCOUNTS FOR THE PERIOD 12/1/2013 TO 12/31/2013. THIS WAS A VIOLATION OF CME RULE 536. Status: Final Sanction Detail: HSBC ASSIGNED INCORRECT CUSTOMER TYPE INDICATOR CODES TO FUTURES ACCOUNTS FOR THE PERIOD 12/1 TO 12/31/2013. THIS IS A VIOLATION OF CME RULE 536. AS A RESULT, THE CME IMPOSED A FINE OF $5,000 ON HSBC ON 3/4/2014. HSBC MADE ADJUSTMENTS TO ITS INTERNAL SYSTEM TO CORRECT THE DISCREPANCIES. HSBC PAID THE FINE ON 5/19/2014. Summary: HSBC ASSIGNED INCORRECT CUSTOMER TYPE INDICATOR CODES TO FUTURES ACCOUNTS FOR THE PERIOD 12/1 TO 12/31/2013. THIS IS A VIOLATION OF CME RULE 536. AS A RESULT, THE CME IMPOSED A FINE OF $5,000 ON HSBC ON 3/4/2014. HSBC MADE ADJUSTMENTS TO ITS INTERNAL SYSTEM TO CORRECT THE DISCREPANCIES. HSBC PAID THE FINE ON 5/19/2014.

Allegations: FINRA ALLEGED THAT HSBC VIOLATED NYSE AMEX RULE 980(C) AND NYSE AMEX RULE 320(E). MARKET REGULATION'S REVIEW REVEALED THAT IN VIOLATION OF NYSE AMEX RULE 980(C) HSBC ACCEPTED AND PROCEDDED AN EED TO EXERCISE 750 AT-THE-MONEY BRCM JANUARY 35 CALLS ON EXPIRATION SATURDAY, JANUARY 21, 2012, AFTER THE 5:30 P.M. ET CUTOFF ON FRIDAY JANUARY 20, 2012. FURTHERMORE, A REVIEW OF HSBC'S WRITTEN SUPERVISORY PROCEDURES ("WSPS") FOUND THAT HSBC DID NOT HAVE ADEQUATE PROCESS OR PROCEDURES IN PLACE FOR COMPLIANCE WITH NYSE AMEX RULE 980. Status: Final Sanction Detail: IN VIOLATION OF THE NYSE AMEX RULE 980(C) HSBC ACCEPTED AND PROCESSED CONTRARY EXERCISE INSTRUCTIONS TO EXERCISE 750 AT-THE-MONEY BRCM JANUARY 35 CALLS ON EXPIRATION SATURADAY, JANUARY 21, 2012, RECEIVED AFTER THE 5:30 P.M. ET CUTOFF ON FRIDAY JANUARY 20, 2012. HSBC CONSENT TO PAY A FINE OF $1,000. IN VIOLATION OF THE NYSE AMEX RULE 320(E) A REVIEW OF HSBC'S WRITTEN SUPERVISORY PROCEDURES ("WSP") FOUND THAT HSBC DID NOT HAVE ADEQUATE PROCESS OR PROCEDURES IN PLACE FOR COMPLIANCE WITH NYSE AMEX RULE 980. Summary: IN VIEW OF THE FOREGOING MARKET REGULATION, HSBC WAS ISSUED A FINE FOR MINOR VIOLATION OF RULES DATED AUGUST 7, 2012 IN THE TOTAL AMOUNT OF $4,500 PURSUANT TO NYSE MKT RULE 476A (IMPOSITION OF FINES FOR MINOR VIOLATION OF RULES) $1,000 FOR HSBC'S VIOLATION OF NYSE AMEX OPTIONS RULE 980(C) AND #3,500 FOR VIOLATING NYSE AMEX RULE 320(E).

Allegations: FINRA ALLEGED THAT HSBC VIOLATED FINRA RULES 5210 AND 2010, NASD RULES 2110 AND 3010. FINRA ALLEGED THAT HSBC ERRONEOUSLY DESIGNATED TWO ACCOUNTS LOCATED IN THE FIRM'S LONDON AFFILIATE TO AUTOMATICALLY TRANSMIT TRADE VOLUME IN U.S.-LISTED SECURITIES TO BLOOMBERG CAUSING HSBC TO OVERSTATE ITS EXECUTED TRADE VOLUME. THE FINDINGS STATED THAT THE HSBC'S SUPERVISORY SYSTEM WITH RESPECT TO THE ADVERTISING OF TRADE VOLUME TO PRIVATE SERVICE PROVIDERS DID NOT PROVIDE FOR SUPERVISION DESIGNED TO ACHIEVE COMPLIANCE WITH CERTAIN APPLICABLE SECURITIES LAWS AND REGULATIONS, AND/OR FINRA/NASD RULES. Status: Final Sanction Detail: FINRA ALLEGED THAT HSBC VIOLATED FINRA RULES 5210 AND 2010, NASD RULES 2110 AND 3010. FINRA ALLEGED THAT HSBC ERRONEOUSLY DESIGNATED TWO ACCOUNTS LOCATED IN THE FIRM'S LONDON AFFILIATE TO AUTOMATICALLY TRANSMIT TRADE VOLUME IN U.S.-LISTED SECURITIES TO BLOOMBERG CAUSING HSBC TO OVERSTATE ITS EXECUTED TRADE VOLUME. THE FINDINGS STATED THAT THE HSBC'S SUPERVISORY SYSTEM WITH RESPECT TO THE ADVERTISING OF TRADE VOLUME TO PRIVATE SERVICE PROVIDERS DID NOT PROVIDE FOR SUPERVISION DESIGNED TO ACHIEVE COMPLIANCE WITH CERTAIN APPLICABLE SECURITIES LAWS AND REGULATIONS, AND/OR FINRA/NASD RULES. Summary: WITHOUT ADMITTING OR DENYING THE FINDINGS HSBC CONSENTED TO THE DESCRIBED SANCTIONS AND TO ENTRY OF FINDINGS. HSBC WAS CENSURED AND FINED $150,000.

Allegations: DURING THE PERIOD OF NOVEMBER 1, 2013 THROUGH JANUARY 31, 2014, HSBC SECUITIES (USA) INC. ("HSBC") VIOLATED RULE 576 BY FAILING TO MAINTAIN ACCURATE AND CURRENT REGISTRATION IN THE EXCHANGE FEE SYSTEM ("EFS"), SUBMITTING ERRONEOUS TAG 50 IDS WITH ORDER MESSAGES, AND SUBMITTING TEST MESSAGES INTO PRODUCTION CME GLOBEX. HSBC ALSO VIOLATED RULE 512 ("REPORTING INFRACTIONS"). Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC PAID $5,000 FINE. THE ALLOCATION OF THE FINE ACROSS BOTH CHICAGO MERCANTILE EXCHANGE AND CHICAGO BOARD OF TRADE IS BASED UPON THE SAME ACTIVITY OCCURRING AT EACH DESIGNATED CONTACT MARKET. (COMPRISED OF $2,500 FOR FAILING TO MAINTAIN ACCURATE AND CURRENT REGISTRATION IN THE EXCHANGE FEE SYSTEM (EFS) AND $2,500 FOR REPORTING INFRACTIONS.

Allegations: THE CHICAGO BOARD OPTIONS EXCHANGE, INC.("CBOE"") ALLEGED THAT HSBC SECURITIES (USA) INC.("HSI") VIOLATED EXCHANGE RULE 3.6A, BY FAILING TO REGISTER ITS CHIEF COMPLIANCE OFFICER AS A PROPRIETARY TRADER COMPLIANCE OFFICER; FAILED TO REGISTER ONE ASSOCIATED PERSON AS A PROPRITARY TRADING PRINCIPAL AND FAILED TO REGISTER FOUR ASSOCIATED PERSONS AS PROPRIETARY TRADERS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS HSBC CONSENTED TO THE DESCRIBED SANCTIONS AND TO ENTRY OF FINDINGS. HSBC WAS CENSURED AND FINED $17,500.

Allegations: HSBC SECURITIES (USA) INC. FAILED TO (I) PROPERLY MONITOR AND RECONCILE DISCREPANCIES WITH ITS CUSTOMER OPTIONS POSITIONS ON FILE AT THE OPTIONS CLEARING CORPORATION ("OCC"), WHICH CAUSED INACCURATE OPEN INTEREST RECORDS FOR 183 BUSINESS DAYS BETWEEN FEBRUARY 24, 2012 AND NOVEMBER 9, 2012, IN ONE INSTANCE, AND FOR 303 BUSINESS DAYS BETWEEN OCTOBER 6, 2011 AND DECEMBER 14, 2012, IN THE SECOND INSTANCE, UNTIL HSBC WAS INSTRUCTED TO EXERCISE THE SUBJECT POSITIONS AND (III) MAINATIN ADEQUATE WRITTEN SUPERVISORY PROCEDURES RELATED TO OCC ADJUSTMENTS AND RECONCILATION PROCESSES. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC WAS FINED $3,500.00.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, HSBC SECURITIES (USA)INC. ("HSBC")CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REPORT P1 TRANSACTIONS IN TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)-ELIGIBLE CORPORATE DEBT SECURITIES TO TRACE WITHIN THE TIME PRESCRIBED BY FINRA RULES AND FAILED TO REPORT S1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBT SECURITIES TO TRACE WITHIN 15 MINUTES OF THE TIME OF EXECUTION. THE FINDINGS STATED THAT HSBC'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TO CERTAIN APPLICABLE SECURITIES LAWS AND REGULATIONS, AND/OR FINRA/NASD RULES. Status: Final Sanction Detail: HSBC SECURITIES (USA) INC. WAS CENSURED, FINED $80,000 AND WILL BE REVISING ITS WRITTEN SUPERVISORY PROCEDURES.

Allegations: THE NASD ALLEGED THAT ON JULY 22,23, 24, 19, AND 31, HSBC ENTERED QUOTATIONS IN THE NASDAQ STOCK MARKET SECURITIE, EXCEEDING THE PARMETERS FOR MAXINUM ALLOWABLE SPREADS PURSUANT TO MARKETPLACE RULE 4613(D). Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, TO THE ENTRY OF FINDINGS BY NASD REGULATION, INC., HSBC SECURITIES, INC. AGREED TO PAY A FINE OF $1,000.00.

Allegations: HSBC SECURITIES (USA) INC. VIOLATED RULES 15C3-5(B) AND (C)(1)(II), AND BZX RULES 3.2 AND 5.1 IN THAT THE FIRM'S FINANCIAL RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEED APPROPRIATE PRICE OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THAT INDICATE DUPLICATIVE ORDERS. Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $9,000. PORTION AGAINST APPLICANT $9,000.00 WAS PAID ON MAY 6, 2021.

Allegations: HSBC SECURITIES (USA) INC. VIOLATED RULES 15C3-5(B) AND (C)(1)(II) AND BYX RULES 3.2 AND 5.1 IN THAT THE FIRM'S FINANCIAL RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEED APPROPRIATE PRICE OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THAT INDICATE DUPLICATIVE ORDERS. Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $9,000. PORTION AGAINST APPLICANT $9,000.00 WAS PAID ON MAY 6, 2021.

Allegations: HSBC SECURITIES (USA) INC. VIOLATED RULES 15C3-5(B) AND (C)(1)(II), AND EDGX RULES 3.2 AND 5.1 IN THAT THE FIRM'S FINANCIAL RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEED APPROPRIATE PRICE OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THAT INDICATE DUPLICATIVE ORDERS. Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $9,000. PORTION AGAINST APPLICANT $9,000.00 WAS PAID ON MAY 6, 2021.

Allegations: HSBC SECURITIES (USA) INC. VIOLATED RULES 15C3-5(B) AND (C)(1)(II), AND EDGA RULES 3.2 AND 5.1 IN THAT THE FIRM'S FINANCIAL RISK MANAGEMENT CONTROLS AND SUPERVISORY PROCEDURES WERE NOT REASONABLY DESIGNED TO PREVENT THE ENTRY OF ERRONEOUS ORDERS, BY REJECTING ORDERS THAT EXCEED APPROPRIATE PRICE OR SIZE PARAMETERS, ON AN ORDER-BY-ORDER BASIS OR OVER A SHORT PERIOD OF TIME, OR THAT INDICATE DUPLICATIVE ORDERS. Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $9,000. PORTION AGAINST APPLICANT $9,000.00 WAS PAID ON MAY 6, 2021.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT ENTERED ERRONEOUS ORDERS. THE FINDINGS STATED THAT ON MARCH 9, 2018, A FOREIGN BANK AFFILIATE SENT TO THE FIRM A MARKET ON CLOSE (MOC) ORDER, WHICH SHOULD NOT HAVE BEEN EXECUTED UNTIL THE CLOSE OF TRADING, TO BUY 37,000 SHARES OF AN EQUITY SECURITY. THE FIRM'S TRADER ENTERED THE ORDER INTO THE FIRM'S SMART ORDER ROUTER (SOR) USING AN AUTOMATED MOC "HOTKEY" FUNCTION IN THE FIRM'S ORDER ENTRY SYSTEM. HOWEVER, DUE TO FAULTY HOTKEY PROGRAMMING, THE ORDER WAS ENTERED AS A REGULAR MARKET ORDER. UPON RECEIPT OF THE ORDER, THE FIRM'S SOR IMMEDIATELY ROUTED CHILD ORDERS TO MARKET WITH LIMIT PRICES UP TO 27.9 PERCENT ABOVE THE NATIONAL BEST OFFER (NBO). AS A RESULT, A TOTAL OF 18,801 SHARES WERE EXECUTED WITHIN 0.3 SECONDS, REPRESENTING 84 PERCENT OF TOTAL SHARES PURCHASED IN THE SECURITY. THE FINDINGS ALSO STATED THAT THE FIRM 'S ERRONEOUS PRICE CONTROL FOR OUTBOUND ORDERS SENT FROM THE SOR WAS NOT REASONABLY DESIGNED AND THUS FAILED TO PREVENT ENTRY OF ERRONEOUS ORDERS. THE CONTROL WAS DESIGNED TO BLOCK ORDERS WITH LIMIT PRICES MORE THAN 10 PERCENT ABOVE THE NBO FOR A SECURITY AT THE TIME THE SOR RECEIVED THE PARENT ORDER. THE OUTBOUND PRICE CONTROL, HOWEVER, WAS NOT DESIGNED TO BLOCK ORDERS IN THE EVENT THE CONTROL WAS NOT ABLE TO CALCULATE A PRICE THRESHOLD. FOR EXAMPLE, ON MARCH 9, 2018, THIS CONTROL WAS NOT ABLE TO CALCULATE A PRICE THRESHOLD BECAUSE OF AN INTERRUPTION IN THE QUOTE DATA FEED. THEREFORE, THE CONTROL DID NOT BLOCK THE ERRONEOUS ORDERS. IN ADDITION, THE FIRM'S WRITTEN DESCRIPTION OF ITS CONTROLS DID NOT REFERENCE OR DESCRIBE THE SOR OUTBOUND PRICE CONTROL. THE FINDINGS ALSO INCLUDED THAT THE OTHER FIRM ERRONEOUS ORDER CONTROLS WERE NOT REASONABLY DESIGNED. THE FIRM MAINTAINED AN AVERAGE DAILY VOLUME (ADV) LIMIT CONTROL. FOR TRADER-MANAGED ORDERS SUCH AS THE MARCH 9, 2018 ORDER, WHICH WERE REVIEWED AND HANDLED BY A FIRM TRADER RATHER THAN THROUGH ENTIRELY AUTOMATED MEANS, THE ADV LIMIT APPLIED WAS 50 PERCENT OF THE SECURITY'S ADV. THE LIMIT WAS NOT REASONABLY DESIGNED FOR THE FIRM'S BUSINESS MODEL. THE 50 PERCENT LIMIT WAS IMPLEMENTED WHEN TRADER-MANAGED CLIENT ORDERS FREQUENTLY INVOLVED ILLIQUID SECURITIES AND ROUTED EXCLUSIVELY TO OTHER BROKER DEALERS, NOT DIRECTLY TO EXCHANGES. SINCE THEN, TRADER-MANAGED ORDERS INCREASINGLY INVOLVED LIQUID SECURITIES AND ROUTING DIRECTLY TO EXCHANGES. FURTHER, ACCORDING TO THE FIRM'S PROCEDURES, IT SHOULD HAVE APPLIED AN ADV LIMIT OF 25 PERCENT TO THE MARCH 9, 2018 ORDER. THE FIRM SELECTED A LOWER ADV LIMIT OF 25 PERCENT IN LATE 2017, AND UPDATED ITS WRITTEN PROCEDURES ACCORDINGLY, BUT THE THRESHOLD WAS NOT UPDATED IN THE FIRM'S SYSTEMS UNTIL APRIL 2018. AS SUCH, THE FIRM'S WRITTEN DESCRIPTION OF ITS ADV CONTROL AND LIMIT WAS INACCURATE. THE FIRM ALSO DID NOT DOCUMENT ITS RATIONALE FOR SETTING THE TRADER-MANAGED ORDER ADV THRESHOLD AT 50 PERCENT. IN ADDITION, THE FIRM COULD OVERRIDE CERTAIN CONTROL TRIGGERS ON A CASE-BY-CASE BASIS BUT THE FIRM'S WRITTEN POLICIES AND PROCEDURES DID NOT PROVIDE GUIDANCE CONCERNING THE REVIEW PROCESS OR CRITERIA FOR SUCH OVERRIDES. FURTHERMORE, THE FIRM'S WSPS DID NOT ACCURATELY REFLECT POST-TRADE REVIEWS OF OVERRIDES. THE FIRM ALSO HAD A NOTIONAL ORDER SIZE CONTROL FOR TRADER-MANAGED CLIENT ORDERS, WHICH APPLIED A UNIQUE THRESHOLD FOR EACH CLIENT. AS OF MARCH 9, 2018, HOWEVER, THE FIRM HAD NOT CONFIGURED THIS CONTROL TO APPLY TO TRADER-MANAGED ORDERS OF THE AFFILIATE CLIENT THAT SENT THE MOC ORDER. NASDAQ FOUND THAT THE FIRM DID NOT HAVE REASONABLE SUPERVISORY PROCEDURES, INCLUDING WSPS, FOR TECHNOLOGY CHANGE MANAGEMENT RELATING TO THE FIRM'S ORDER ENTRY SYSTEM. SPECIFICALLY, THE FIRM DID NOT HAVE REASONABLE SUPERVISORY PROCEDURES CONCERNING HOTKEYS USED FOR PROCESSING ORDERS. AS A RESULT, THE FIRM FAILED TO IDENTIFY THE PROGRAMMING FLAW THAT RESULTED IN THE MOC ORDER BEING ENTERED INTO THE SOR AS A MARKET ORDER. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED A TOTAL OF $45,000, OF WHICH $9,000 IS ALLOCATED TO NASDAQ, WITH THE REMAINDER ALLOCATED TO OTHER REGULATORS, AND REQUIRED TO REVISE ITS WRITTEN DESCRIPTION OF ITS RISK MANAGEMENT CONTROLS WITH RESPECT TO ITS PRICE CONTROL FOR OUTBOUND ORDERS SENT FROM THE SMART ORDER ROUTER, AND WRITTEN PROCEDURES WITH RESPECT TO THE FIRM'S ABILITY TO OVERRIDE CERTAIN CONTROL TRIGGERS ON A CASE-BY-CASE BASIS. Summary: WITHOUT ADMITTING OR DENYING THE FINDINGS HSBC CONSENTED TO THE SANCTIONS TO ENTRY OF FINDINGS THAT IT ENTERED ERRONEOUS ORDERS. HSBC WAS CENSURED AND FINED $9,000.00.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT IT FAILED TO TAKE REASONABLE STEPS TO ENSURE THAT INTERMARKET SWEEPORDERS (ISOS) IT ROUTED TO CERTAIN MARKET CENTERS MET THE REQUIREMENTS SET FORTH IN RULES600(B)(30) AND 600(B)(31) OF REGULATION NATIONAL MARKET SYSTEM (NMS) OF THE SECURITIESEXCHANGE ACT OF 1934. THE FINDINGS STATED THAT WHEN THE FIRM ROUTED ORDERS TO VARIOUS EXCHANGES THAT IT MARKED AS ISOS DURING THIS PERIOD, THREE TECHNICAL ISSUES WITH ITS VENDOR'SSMART ORDER ROUTER RESULTED IN THE FIRM NOT RECOGNIZING, AND THEN ROUTING ADDITIONAL ISOSNECESSARY TO EXECUTE AGAINST, PROTECTED QUOTES DISPLAYED BY CERTAIN MARKET CENTERS. AS ARESULT, THE FIRM SENT A TOTAL OF 10,265 ISO ORDERS THAT WERE PRICED THROUGH OTHER MARKETCENTERS' PROTECTED LIQUIDITY BECAUSE THE FIRM DID NOT ROUTE THE ADDITIONAL ISOS NECESSARY TOEXECUTE AGAINST THOSE PROTECTED QUOTES. THE FIRM'S VENDOR LATER RESOLVED THE TECHNICALISSUES IN ITS SMART ORDER ROUTER SYSTEM. THE FINDINGS ALSO STATED THAT THE FIRM'S SUPERVISORYSYSTEM WAS NOT REASONABLY DESIGNED TO COMPLY WITH RULE 611 OF REGULATION NMS. THE FIRM HADNO REVIEWS OR PROCEDURES TO ESTABLISH THAT ISOS IT ROUTED TO COMPLY WITH RULES 600(B)(30) AND600(B)(31) BY EXECUTING AGAINST PROTECTED QUOTATIONS WERE SENT AND RECEIVED BY ALL NECESSARYVENUES, ON A TIMELY BASIS, FOR THE CORRECT SIZE AND PRICE. BECAUSE OF THESE SUPERVISORYDEFICIENCIES, THE FIRM FAILED TO DETECT AND TIMELY REMEDIATE THE THREE TECHNICAL ISSUES WITH ITSVENDOR'S SMART ORDER ROUTER THAT CAUSED THE FIRM TO ROUTE ISOS THAT WERE PRICED THROUGHMARKET CENTERS' PROTECTED QUOTATIONS. THE FIRM HAS SINCE REMEDIATED THESE DEFICIENCIES. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $19,197. RELATED DISCIPLINARY ACTION ON BEHALF OF CBOE BYXEXCHANGE, INC.; CBOE BZX EXCHANGE, INC.; CBOE EDGA EXCHANGE, INC.; CBOE EDGX EXCHANGE,INC.; INVESTORS EXCHANGE, LLC; THE NEW YORK STOCK EXCHANGE LLC; NYSE AMERICAN LLC; NYSECHICAGO, INC., AND NYSE ARCA, INC. FOR SIMILAR VIOLATIONS IS BEING TAKEN CONCURRENTLY INCONJUNCTION WITH THIS MATTER. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, AND FAILED TOESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS, AND IEX RULES,CONCERNING COMPLIANCE WITH RULE 611(C) OF REGULATION NATIONAL MARKET SYSTEM (NMS) OF THE SECURITIES EXCHANGE ACT OF 1934 AND IEX RULE 11.190(B)(12). THE FINDINGS STATED THAT THE FIRM HADNO REVIEWS OR PROCEDURES TO ESTABLISH THAT INTERMARKET SWEEP ORDERS (ISOS) IT ROUTED TOCOMPLY WITH RULES 600(B)(30) AND 600(B)(31) BY EXECUTING AGAINST PROTECTED QUOTATIONS WERESENT AND RECEIVED BY ALL NECESSARY VENUES, ON A TIMELY BASIS, FOR THE CORRECT SIZE AND PRICE, INCOMPLIANCE WITH RULE 611(C). BECAUSE OF THESE SUPERVISORY DEFICIENCIES, THE FIRM FAILED TODETECT AND TIMELY REMEDIATE THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER THATCAUSED THE FIRM TO ROUTE ISOS THAT WERE PRICED THROUGH MARKET CENTERS' PROTECTED QUOTATIONS.THE FIRM HAS SINCE REMEDIATED THESE DEFICIENCIES. ACCORDINGLY, THE FIRM VIOLATED IEX RULES5.110(A), 5.110(B), AND 3.110 Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $4,569. RELATED DISCIPLINARY ACTION ON BEHALF OF CBOE BYXEXCHANGE, INC.; CBOE BZX EXCHANGE, INC.; CBOE EDGA EXCHANGE, INC.; CBOE EDGX EXCHANGE, INC.;FINRA; THE NEW YORK STOCK EXCHANGE LLC; NYSE AMERICAN LLC; NYSE CHICAGO, INC., AND NYSEARCA, INC. FOR SIMILAR VIOLATIONS IS BEING TAKEN CONCURRENTLY IN CONJUNCTION WITH THISMATTER. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO TAKE REASONABLE STEPS TO ENSURE THAT INTERMARKET SWEEP ORDERS (ISOS) IT ROUTED TO CERTAIN MARKET CENTERS MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31) OF REGULATION NATIONAL MARKET SYSTEM (NMS) OF THE SECURITIES EXCHANGE ACT OF 1934. THE FINDINGS STATED THAT WHEN THE FIRM ROUTED ORDERS TO VARIOUS EXCHANGES THAT IT MARKED AS ISOS, THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER RESULTED IN THE FIRM NOT RECOGNIZING, AND THEN ROUTING ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST, PROTECTED QUOTES DISPLAYED BY CERTAIN MARKET CENTERS. AS A RESULT, THE FIRM SENT A TOTAL OF 10,265 ISO ORDERS, INCLUDING 2,107 ORDERS TO NYSE ARCA, THAT WERE PRICED THROUGH OTHER MARKET CENTERS' PROTECTED LIQUIDITY BECAUSE THE FIRM DID NOT ROUTE THE ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST THOSE PROTECTED QUOTES. THE FIRM DID NOT IDENTIFY THESE ISSUES AND DID NOT CONDUCT A REVIEW DESIGNED TO VERIFY THAT IT ROUTED ALL NECESSARY ISOS TO EXECUTE AGAINST PROTECTED QUOTATIONS. THE FIRM'S VENDOR HAS SINCE RESOLVED THE TECHNICAL ISSUES IN ITS SMART ORDER ROUTER SYSTEM. ACCORDINGLY, THE FIRM VIOLATED RULE 611(C) OF REGULATION NMS, NYSE ARCA EQUITIES RULE 7.31(E)(2) (PRIOR TO AUGUST 17, 2017), AND NYSE ARCA RULE 7.31-E(E)(3) (ON AND AFTER AUGUST 17, 2017). THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(C) OF REGULATION NMS AND NYSE ARCA EQUITIES RULE 7.31(E)(2) (PRIOR TO AUGUST 17, 2017) AND NYSE ARCA RULE 7.31-E(E)(3) (ON AND AFTER AUGUST 17, 2017). THE FIRM HAD NO REVIEWS OR PROCEDURES TO ESTABLISH THAT ISOS IT ROUTED TO COMPLY WITH RULES 600(B)(30) AND 600(B)(31) BY EXECUTING AGAINST PROTECTED QUOTATIONS WERE SENT AND RECEIVED BY ALL NECESSARY VENUES, ON A TIMELY BASIS, FOR THE CORRECT SIZE AND PRICE, IN COMPLIANCE WITH RULE 611(C) AND NYSE ARCA EQUITIES RULE 7.31(E)(2) AND NYSE ARCA RULE 7.31-E(E)(3), AND, ACCORDINGLY, ITS WSPS DID NOT DESCRIBE ANY SUCH REVIEWS OR PROCEDURES. GIVEN THAT THE FIRM CONTINUOUSLY ROUTED VIOLATIVE ISOS, THIS WAS UNREASONABLE. BECAUSE OF THESE SUPERVISORY DEFICIENCIES, THE FIRM FAILED TO DETECT AND TIMELY REMEDIATE THE THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER THAT CAUSED THE FIRM TO ROUTE ISOS THAT WERE PRICED THROUGH MARKET CENTERS' PROTECTED QUOTATIONS. THE FIRM HAS SINCE REMEDIATED THESE DEFICIENCIES. ACCORDINGLY, THE FIRM VIOLATED NYSE ARCA EQUITIES RULE 6.18 (PRIOR TO AUGUST 17, 2017) AND NYSE ARCA RULES 11.18(B) AND (C) (ON AND AFTER AUGUST 17, 2017). Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $21,227, RESOLVED SIMULTANEOUSLY WITH SIMILAR MATTERS FOR A TOTAL FINE OF $125,000. THOSE MATTERS WERE BROUGHT BY CBOE BYX EXCHANGE, INC. (BYX); CBOE BZX EXCHANGE, INC. (BZX); CBOE EDGA EXCHANGE, INC. (EDGA); CBOE EDGX EXCHANGE, INC. (EDGX); INVESTORS EXCHANGE, LLC (IEX); NYSE AMERICAN LLC (NYSE AMERICAN); NEW YORK STOCK EXCHANGE LLC (NYSE); NYSE CHICAGO, INC. (CHX) (COLLECTIVELY, THE EXCHANGES), AND FINRA. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: NYSE CHICAGO, INC. ("NYSE CHICAGO" OR THE "EXCHANGE"), PURSUANT TO ARTICLE 12, RULE 1(D) OF THE RULES OF EXCHANGE, IN LIEU OF FILING CHARGES, HEREBY ENTERS THIS ORDER AGAINST RESPONDENT HSBC SECURITIES (USA) INC. ("HSBC," "RESPONDENT," OR THE "FIRM") INSTITUTING PROCEEDINGS, ACCEPTING AN OFFER OF SETTLEMENT, MAKING FINDINGS, AND IMPOSING SANCTIONS. NYSE CHICAGO FINDS THAT BETWEEN JULY 2017 AND SEPTEMBER 2020, HSBC FAILED TO TAKE REASONABLE STEPS TO ESTABLISH THAT THE INTERMARKET SWEEP ORDERS (ISOS) IT ROUTED MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31) OF REGULATION NATIONAL MARKET SYSTEM (NMS) OF THE SECURITIES EXCHANGE ACT OF 1934. SPECIFICALLY, WHEN HSBC ROUTED ORDERS TO VARIOUS EXCHANGES THAT IT MARKED AS ISOS DURING THIS PERIOD, THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER RESULTED IN THE FIRM NOT RECOGNIZING, AND THEN ROUTING ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST, PROTECTED QUOTES DISPLAYED BY CERTAIN MARKET CENTERS. AS A RESULT, HSBC SENT A TOTAL OF 10,265 ISO ORDERS, INCLUDING 17 ORDERS TO NYSE CHICAGO, THAT WERE PRICED THROUGH OTHER MARKET CENTERS' PROTECTED LIQUIDITY BECAUSE THE FIRM DID NOT ROUTE THE ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST THOSE PROTECTED QUOTES. HSBC DID NOT IDENTIFY THESE ISSUES AND DID NOT CONDUCT A REVIEW DESIGNED TO VERIFY THAT IT ROUTED ALL NECESSARY ISOS TO EXECUTE AGAINST PROTECTED QUOTATIONS. ACCORDINGLY, HSBC FAILED TO TAKE REASONABLE STEPS TO ESTABLISH THAT THE ISOS IT ROUTED MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31). THE FIRM'S VENDOR RESOLVED THE TECHNICAL ISSUES IN ITS SMART ORDER ROUTER SYSTEM IN SEPTEMBER 2020. ADDITIONALLY, PRIOR TO JULY 2017, HSBC ROUTED ISOS ONLY TO EXECUTING BROKERS. WHEN HSBC BEGAN ROUTING ISOS DIRECTLY TO EXCHANGES, THE FIRM DID NOT UPDATE ITS SUPERVISORY SYSTEMS TO INCLUDE A REVIEW OF ISOS FOR COMPLIANCE WITH RULE 611 OR RELATED EXCHANGE RULES. SPECIFICALLY, HSBC HAD NO REVIEWS OR PROCEDURES TO ESTABLISH THAT ISOS IT ROUTED TO COMPLY WITH RULES 600(B)(30) AND 600(B)(31) OF REGULATION NMS BY EXECUTING AGAINST PROTECTED QUOTATIONS WERE SENT AND RECEIVED BY ALL NECESSARY VENUES, ON A TIMELY BASIS, FOR THE CORRECT SIZE AND PRICE, IN COMPLIANCE WITH RULE 611(C) AND RELATED EXCHANGE RULES, AND, ACCORDINGLY, ITS WRITTEN SUPERVISORY PROCEDURES DID NOT DESCRIBE ANY SUCH REVIEWS OR PROCEDURES. GIVEN THAT HSBC CONTINUOUSLY ROUTED VIOLATIVE ISOS BETWEEN JULY 2017 AND SEPTEMBER 2020, THIS WAS UNREASONABLE. HSBC HAS SINCE REMEDIATED THESE DEFICIENCIES. AS A RESULT OF THE CONDUCT DESCRIBED HEREIN, HSBC VIOLATED RULE 611(C) OF REGULATION NMS, NYSE CHICAGO RULE 7.31(E)(3), AND NYSE CHICAGO ARTICLE 6, RULES 5(A) AND (C). Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $9,804.00, RESOLVED SIMULTANEOUSLY WITH SIMILAR MATTERS FOR A TOTAL FINE OF $125,000. THOSE MATTERS WERE BROUGHT BY CBOE BYX EXCHANGE, INC. (BYX); CBOE BZX EXCHANGE, INC. (BZX); CBOE EDGA EXCHANGE, INC. (EDGA); CBOE EDGX EXCHANGE, INC. (EDGX); INVESTORS EXCHANGE, LLC (IEX); NEW YORK STOCK EXCHANGE LLC (NYSE); NYSE ARCA, INC. (ARCA); NYSE AMERICAN LLC (NYSE AMERICAN) (COLLECTIVELY, THE EXCHANGES), AND FINRA. Summary: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT ("OFFER") TO NYSE CHICAGO, WHICH NYSE CHICAGO HAS DETERMINED TO ACCEPT. AS A RESULT OF THE CONDUCT DESCRIBED HEREIN, HSBC VIOLATED RULE 611(C) OF REGULATION NMS AND NYSE CHICAGO RULE 7.31(E)(3), AND NYSE CHICAGO ARTICLE 6, RULES 5(A) AND (C). IN VIEW OF THE FOREGOING, THE EXCHANGE DEEMS IT APPROPRIATE TO CENSURE AND FINE HSBC NINE THOUSAND EIGHT HUNDRED AND FOUR DOLLARS ($9,804.00), RESOLVED SIMULTANEOUSLY WITH SIMILAR MATTERS FOR A TOTAL FINE OF $125,000. HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO TAKE REASONABLE STEPS TO ENSURE THAT INTERMARKET SWEEP ORDERS (ISOS) IT ROUTED TO CERTAIN MARKET CENTERS MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31) OF REGULATION NATIONAL MARKET SYSTEM (NMS) OF THE SECURITIES EXCHANGE ACT OF 1934. THE FINDINGS STATED THAT WHEN THE FIRM ROUTED ORDERS TO VARIOUS EXCHANGES THAT IT MARKED AS ISOS DURING THIS PERIOD, THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER RESULTED IN THE FIRM NOT RECOGNIZING, AND THEN ROUTING ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST, PROTECTED QUOTES DISPLAYED BY CERTAIN MARKET CENTERS. AS A RESULT, THE FIRM SENT A TOTAL OF 10,265 ISO ORDERS, INCLUDING 47 ORDERS TO NYSE AMERICAN, THAT WERE PRICED THROUGH OTHER MARKET CENTERS' PROTECTED LIQUIDITY BECAUSE THE FIRM DID NOT ROUTE THE ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST THOSE PROTECTED QUOTES. THE FIRM DID NOT IDENTIFY THESE ISSUES AND DID NOT CONDUCT A REVIEW DESIGNED TO VERIFY THAT IT ROUTED ALL NECESSARY ISOS TO EXECUTE AGAINST PROTECTED QUOTATIONS. THE FIRM'S VENDOR HAS SINCE RESOLVED THE TECHNICAL ISSUES IN ITS SMART ORDER ROUTER SYSTEM. ACCORDINGLY, THE FIRM VIOLATED RULE 611(C) OF REGULATION NMS AND NYSE AMERICAN RULE 7.31E(E)(3). THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(C) OF REGULATION NMS AND NYSE AMERICAN RULE 7.31E(E)(3). THE FIRM HAD NO REVIEWS OR PROCEDURES TO ESTABLISH THAT ISOS IT ROUTED TO COMPLY WITH RULES 600(B)(30) AND 600(B)(31) OF REGULATION NMS BY EXECUTING AGAINST PROTECTED QUOTATIONS WERE SENT AND RECEIVED BY ALL NECESSARY VENUES, ON A TIMELY BASIS, FOR THE CORRECT SIZE AND PRICE, IN COMPLIANCE WITH RULE 611(C) AND NYSE AMERICAN RULE 7.31E(E)(3), AND, ACCORDINGLY, ITS WSPS DID NOT DESCRIBE ANY SUCH REVIEWS OR PROCEDURES. GIVEN THAT THE FIRM CONTINUOUSLY ROUTED VIOLATIVE ISOS, THIS WAS UNREASONABLE. BECAUSE OF THESE SUPERVISORY DEFICIENCIES, THE FIRM FAILED TO DETECT AND TIMELY REMEDIATE THE THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER THAT CAUSED THE FIRM TO ROUTE ISOS THAT WERE PRICED THROUGH MARKET CENTERS' PROTECTED QUOTATIONS. THE FIRM HAS SINCE REMEDIATED THESE DEFICIENCIES. ACCORDINGLY, THE FIRM VIOLATED NYSE MKT RULE 3110 (PRIOR TO JULY 24, 2017) AND NYSE AMERICAN RULES 3110(A) AND (B) (ON AND AFTER JULY 24, 2017). Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $10,064, RESOLVED SIMULTANEOUSLY WITH SIMILAR MATTERS FOR A TOTAL FINE OF $125,000. THOSE MATTERS WERE BROUGHT BY CBOE BYX EXCHANGE, INC. (BYX); CBOE BZX EXCHANGE, INC. (BZX); CBOE EDGA EXCHANGE, INC. (EDGA); CBOE EDGX EXCHANGE, INC. (EDGX); INVESTORS EXCHANGE, LLC (IEX); NEW YORK STOCK EXCHANGE LLC (NYSE); NYSE ARCA, INC. (ARCA); NYSE CHICAGO, INC. (CHX) (COLLECTIVELY, THE EXCHANGES), AND FINRA. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO TAKE REASONABLE STEPS TO ENSURE THAT INTERMARKET SWEEP ORDERS (ISOS) IT ROUTED TO CERTAIN MARKET CENTERS MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31) OF REGULATION NATIONAL MARKET SYSTEM (NMS) OF THE SECURITIES EXCHANGE ACT OF 1934. THE FINDINGS STATED THAT WHEN THE FIRM ROUTED ORDERS TO VARIOUS EXCHANGES THAT IT MARKED AS ISOS, THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER RESULTED IN THE FIRM NOT RECOGNIZING, AND THEN ROUTING ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST, PROTECTED QUOTES DISPLAYED BY CERTAIN MARKET CENTERS. AS A RESULT, THE FIRM SENT A TOTAL OF 10,265 ISO ORDERS, INCLUDING 1,393 ORDERS TO NYSE, THAT WERE PRICED THROUGH OTHER MARKET CENTERS' PROTECTED LIQUIDITY BECAUSE THE FIRM DID NOT ROUTE THE ADDITIONAL ISOS NECESSARY TO EXECUTE AGAINST THOSE PROTECTED QUOTES. THE FIRM DID NOT IDENTIFY THESE ISSUES AND DID NOT CONDUCT A REVIEW DESIGNED TO VERIFY THAT IT ROUTED ALL NECESSARY ISOS TO EXECUTE AGAINST PROTECTED QUOTATIONS. THE FIRM'S VENDOR HAS SINCE RESOLVED THE TECHNICAL ISSUES IN ITS SMART ORDER ROUTER SYSTEM. AS A RESULT, THE FIRM VIOLATED RULE 611(C) OF REGULATION NMS AND NYSE RULE 7.31(E)(3). THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(C) OF REGULATION NMS AND NYSE RULE 7.31(E)(3). THE FIRM HAD NO REVIEWS OR PROCEDURES TO ESTABLISH THAT ISOS IT ROUTED TO COMPLY WITH RULES 600(B)(30) AND 600(B)(31) BY EXECUTING AGAINST PROTECTED QUOTATIONS WERE SENT AND RECEIVED BY ALL NECESSARY VENUES, ON A TIMELY BASIS, FOR THE CORRECT SIZE AND PRICE, IN COMPLIANCE WITH RULE 611(C) AND NYSE RULE 7.31(E)(3), AND, ACCORDINGLY, ITS WSPS DID NOT DESCRIBE ANY SUCH REVIEWS OR PROCEDURES. GIVEN THAT THE FIRM CONTINUOUSLY ROUTED VIOLATIVE ISOS, THIS WAS UNREASONABLE. BECAUSE OF THESE SUPERVISORY DEFICIENCIES, THE FIRM FAILED TO DETECT AND TIMELY REMEDIATE THE THREE TECHNICAL ISSUES WITH ITS VENDOR'S SMART ORDER ROUTER THAT CAUSED THE FIRM TO ROUTE ISOS THAT WERE PRICED THROUGH MARKET CENTERS' PROTECTED QUOTATIONS. THE FIRM HAS SINCE REMEDIATED THESE DEFICIENCIES. AS A RESULT, THE FIRM VIOLATED NYSE RULES 3110(A) AND (B). Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $17,389, RESOLVED SIMULTANEOUSLY WITH SIMILAR MATTERS FOR A TOTAL FINE OF $125,000. THOSE MATTERS WERE BROUGHT BY CBOE BYX EXCHANGE, INC. (BYX); CBOE BZX EXCHANGE, INC. (BZX); CBOE EDGA EXCHANGE, INC. (EDGA); CBOE EDGX EXCHANGE, INC. (EDGX); INVESTORS EXCHANGE, LLC (IEX); NYSE AMERICAN LLC (NYSE AMERICAN) NYSE ARCA, INC. (ARCA); NYSE CHICAGO, INC. (CHX) (COLLECTIVELY, THE EXCHANGES), AND FINRA. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: HSBC SECURITIES (USA) INC. VIOLATED BYX RULES 3.2 AND 11.9(D); AND RULE 611(C) IN THAT THE FIRM FAILED TO TAKE REASONABLE STEPS TO ESTABLISH THAT THE ISOS IT ROUTED MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31). THE FIRM'S VENDOR RESOLVED THESE TECHNICAL ISSUES IN SEPTEMBER 2020. HSBC ALSO VIOLATED BYX RULE 5.1 IN THAT THE FIRM'S SUPERVISORY SYSTEM, INCLUDING ITS WSPS, WAS NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(C). Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $9,750. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: HSBC SECURITIES (USA) INC. VIOLATED BZX RULES 3.2 AND 11.9(D); AND RULE 611(C) IN THAT THE FIRM FAILED TO TAKE REASONABLE STEPS TO ESTABLISH THAT THE ISOS IT ROUTED MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31). THE FIRM'S VENDOR RESOLVED THESE TECHNICAL ISSUES IN SEPTEMBER 2020. THE FIRM ALSO VIOLATED BZX RULE 5.1 IN THAT THE FIRM'S SUPERVISORY SYSTEM, INCLUDING ITS WSPS, WAS NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(C). Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $13,250. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: HSBC SECURITIES (USA) INC. VIOLATED EDGX RULES 3.2 AND 11.8(C); RULE 611(C) IN THAT THE FIRM FAILED TO TAKE REASONABLE STEPS TO ESTABLISH THAT THE ISOS IT ROUTED MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(3) AND 600(B)(31). THE FIRM'S VENDOR RESOLVED THESE TECHNICAL ISSUES IN SEPTEMBER 2020. THE FIRM ALSO VIOLATED EDGX RULE 5.1 IN THAT THE FIRM'S SUPERVISORY SYSTEM, INCLUDING ITS WSPS, WAS NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(C). Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $13,250. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: HSBC SECURITIES (USA), INC. VIOLATED EDGA RULES 3.2 AND 11.8(C); AND RULE 611(C) IN THAT THE FIRM FAILED TO TAKE REASONABLE STEPS TO ESTABLISH THAT THE ISOS IT ROUTED MET THE REQUIREMENTS SET FORTH IN RULES 600(B)(30) AND 600(B)(31). THE FIRM'S VENDOR RESOLVED THESE TECHNICAL ISSUES IN SEPTEMBER 2020. THE FIRM ALSO VIOLATED EDGA RULE 5.1 IN THAT THE FIRM'S SUPERVISORY SYSTEM, INCLUDING ITS WSPS, WAS NOT REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(C). Status: Final Sanction Detail: A CENSURE AND A MONETARY FINE IN THE AMOUNT OF $6,500. Summary: HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: HSBC SECURITIES (USA), INC. FAILED TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE (CHANGE IN THE COO) ON FEBRUARY 16, 2022. THEREFORE, PURSUANT TO THEIR RESPECTIVE RULES AND PROCEDURES, DTC, NSCC AND GSC (COLLECTIVELY THE "CLEARING AGENCIES) ARE IMPOSING A SINGLE FINE OF $5000.00 FOR FAILURE TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE. THE FINE WAS ALLOCATED AMONGST THE CLEARING AGENCIES AS SET FORTH, DTC $1,666.67, NSCC $1,666.67 AND GSD $1,666.66. HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO. Status: Final Sanction Detail: HSBC SECURITIES (USA), INC. FAILED TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE (CHANGE IN THE COO) ON FEBRUARY 16, 2022. THEREFORE, PURSUANT TO THEIR RESPECTIVE RULES AND PROCEDURES, DTC, NSCC AND GSC (COLLECTIVELY THE "CLEARING AGENCIES) ARE IMPOSING A SINGLE FINE OF $5000.00 FOR FAILURE TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE. THE FINE WAS ALLOCATED AMONGST THE CLEARING AGENCIES AS SET FORTH, DTC $1,666.67, NSCC $1,666.67 AND GSD $1,666.66. HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO. Summary: HSBC SECURITIES (USA), INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: HSBC SECURITIES (USA), INC. FAILED TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE (CHANGE IN THE COO) ON FEBRUARY 16, 2022. THEREFORE, PURSUANT TO THEIR RESPECTIVE RULES AND PROCEDURES, DTC, NSCC AND GSC (COLLECTIVELY THE "CLEARING AGENCIES) ARE IMPOSING A SINGLE FINE OF $5000.00 FOR FAILURE TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE. THE FINE WAS ALLOCATED AMONGST THE CLEARING AGENCIES AS SET FORTH, DTC $1,666.67, NSCC $1,666.67 AND GSD $1,666.66. HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO. Status: Final Sanction Detail: HSBC SECURITIES (USA), INC. FAILED TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE (CHANGE IN THE COO) ON FEBRUARY 16, 2022. THEREFORE, PURSUANT TO THEIR RESPECTIVE RULES AND PROCEDURES, DTC, NSCC AND GSC (COLLECTIVELY THE "CLEARING AGENCIES) ARE IMPOSING A SINGLE FINE OF $5000.00 FOR FAILURE TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE. THE FINE WAS ALLOCATED AMONGST THE CLEARING AGENCIES AS SET FORTH, DTC $1,666.67, NSCC $1,666.67 AND GSD $1,666.66. HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO. Summary: HSBC SECURITIES (USA), INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: HSBC SECURITIES (USA), INC. FAILED TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE (CHANGE IN THE COO) ON FEBRUARY 16, 2022. THEREFORE, PURSUANT TO THEIR RESPECTIVE RULES AND PROCEDURES, DTC, NSCC AND GSC (COLLECTIVELY THE "CLEARING AGENCIES) ARE IMPOSING A SINGLE FINE OF $5000.00 FOR FAILURE TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE. THE FINE WAS ALLOCATED AMONGST THE CLEARING AGENCIES AS SET FORTH, DTC $1,666.67, NSCC $1,666.67 AND GSD $1,666.66. HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO. Status: Final Sanction Detail: HSBC SECURITIES (USA), INC. FAILED TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE (CHANGE IN THE COO) ON FEBRUARY 16, 2022. THEREFORE, PURSUANT TO THEIR RESPECTIVE RULES AND PROCEDURES, DTC, NSCC AND GSC (COLLECTIVELY THE "CLEARING AGENCIES) ARE IMPOSING A SINGLE FINE OF $5000.00 FOR FAILURE TO NOTIFY AND SUPPLY REQUIRED DATA AS TO A MATERIAL CHANGE. THE FINE WAS ALLOCATED AMONGST THE CLEARING AGENCIES AS SET FORTH, DTC $1,666.67, NSCC $1,666.67 AND GSD $1,666.66. HSBC SECURITIES (USA) INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO. Summary: HSBC SECURITIES (USA), INC. INTENDS TO CAUSE THE FINE TO BE PAID WITHIN THE TIMEFRAME DIRECTED BY THE SRO.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THEENTRY OF FINDINGS THAT IT FAILED TO TIMELY REPORT TO TRACE TRANSACTIONS IN TRACE-ELIGIBLECORPORATE DEBT SECURITIES. THE FINDINGS STATED THAT THE FIRM'S LATE REPORTING WAS CAUSED BY,AMONG OTHER THINGS, DELAYS ASSOCIATED WITH THE MANUAL HANDLING OF ORDERS, SUCH AS FIRMEMPLOYEES ENTERING TRADES LATE AND MAKING UNTIMELY AMENDMENTS AND CORRECTIONS TOTRANSACTION TERMS, AND ISSUES RELATED TO THE MANUAL PROCESS REQUIRED TO REPORT TRANSACTIONS IN CERTAIN FOREIGN DEBT SECURITIES. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISHAND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO ACHIEVE COMPLIANCEWITH TRACE REPORTING REQUIREMENTS. SPECIFICALLY, THE FIRM'S WSPS LACKED REASONABLE GUIDANCEFOR SUPERVISORS TO ADDRESS TRADERS' REPEATED INSTANCES OF LATE REPORTING. THE FIRM IDENTIFIEDSPECIFIC TRADERS RESPONSIBLE FOR THE LATE REPORTING BUT FAILED TO EFFECTIVELY ADDRESS THEIRPATTERN OF LATE REPORTING. THE FIRM'S WSPS REQUIRED SUPERVISORS TO ADDRESS AND RESOLVE ISSUESWITH SUCH REPEAT OFFENDERS BUT PROVIDED NO GUIDANCE ON HOW TO DO SO. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $125,000, AND REQUIRED TO CERTIFY THAT IT HAS REMEDIATED THE ISSUES IDENTIFIED IN THE AWC AND IMPLEMENTED A REASONABLY DESIGNED SUPERVISORY SYSTEM,INCLUDING WSPS.

Allegations: COMMODITY EXCHANGE BUSINESS CONDUCT COMMITTEE ("BCC") FOUND THAT ON JANUARY 28, 2013 HSBC BANK USA N.A. ("HSBC") ENTERED INTO TWO EFRP TRANSACTIONS AND ON MAY 30, 2012, HSBC ENTERED INTO ONE EFRP TRANSACTION, IN WHICH HSBC WAS ON BOTH SIDES OF THE TRANSACTIONS. THE PANEL FOUND THAT THE TRANSACTIONS DID NOT CONTAIN DOCUMENTATION OF THE CORRESPONDING CASH POSITIONS AND, THUS, WERE NOT BONA FIDE EFRP TRANSACTIONS. THE PANEL FOUND THAT HSBC VIOLATED NYMEX RULE 538.H AND 534. Status: Final Sanction Detail: HSBC BANK USA N.A. IN ACCORDANCE WITH THE SETTLEMENT PAID A FINE IN THE AMOUNT OF $40,000. Summary: WITHOUT ADMITTING OR DENYING THE RULE VIOLATIONS UPON WHICH THE PENALTY IS BASED, HSBC BANK USA N.A. IN ACCORDANCE WITH THE SETTLEMENT PAID A FINE IN THE AMOUNT OF $40,000.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT PUBLISHED EQUITY AND DEBT RESEARCH REPORTS THAT CONTAINED INACCURATE DISCLOSURES ABOUT ITS CONFLICTS OF INTEREST. THE FINDINGS STATE THAT THE FIRM'S DISCLOSURE INACCURACIES COMPRISED OF BOTH FAILURES TO DISCLOSE CONFLICTS AS WELL AS DISCLOSURE OF CONFLICTS THAT DID EXIST, WITH MOST BEING OVER-DISCLOSURE. THE FIRM'S DISCLOSURE INACCURACIES STEMMED FROM SEVERAL ISSUES WITH THE DATA FEEDS IT USED TO GENERATE CONFLICTS DISCLOSURES IN RESEARCH REPORTS. THE FIRM ALSO APPLIED A DEFINITON OF INVESTMENT BANKING SERVICES THAT INCORRECTLY EXCLUDED SUCH SERVICE IN CONNECT WITH ASSET-BACKED SECURITIES, PRIVATE PLACEMENT BONDS, AND CERTAIN STRUCTURED PRODUCTS. AS A RESULT, THE FIRM DID NOT INCLUDE DATA FROM THOSE PRODUCTS IN ITS DATA FEEDS, CAUSING FAILURE TO DISCLOSE INVESTMENT BANKING RELATED CONFLICTS INVOLVING THOSE OFFERINGS AND PRODUCTS. IN ADDITION, THE FIRM BASED ITS DISCLOSURES OF INVESTMENT BANKING REVENUE ON TWO YEARS OF DATA EVEN THOUGH THE APPLICABLE RULES LIMIT THE SCOPE OF THE DATA TO ONE YEAR, RESULTING IN OVER DISCLOSURE. FURTHER, THE FIRM AT TIMES DID NOT TIMELY ADD NEW CLIENT RELATIONSHIPS TO THE DATA FEEDS OR USED INCONSISTENT NAMING CONVENTIONS FOR THE SAME CLIENT, RESULTING IN A LACK OF REQUIRED DISCLOSURES OR INACCURATE DISCLOSURES. THE FINDINGS ALSO STATED THAT THE FIRM DID NOT ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WSPS, THAT WAS REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE DISCLOSURE REQUIREMENTS OF FINRA RULES 2241(C) AND 2242(C) AND NASD RULE 2711(H). THE FIRM HAD NO PROCEDURES, TESTING, OR OTHER SYSTEM TO CONFIRM THAT THE INFORMATION IN THE DATA FEEDS WAS ACCURATE AND COMPLETE, NOR DID THE FIRM ASSIGN RESPONSIBILITY FOR CONFIRMING THE ACCURACY AND COMPLETENESS OF ITS DATA FEEDS TO ANY INDIVIDUALS OR GROUPS. CONSEQUENTLY, THE FIRM WAS UNABLE TO DETECT THE DATA FEED DEFICIENCIES, CAUSING THE DISCLOSURE INACCURACIES TO OCCUR OVER ALMOST NINE YEARS. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $2,000.000 AND REQUIRED TO REMEDIATE THE ISSUES IDENTIFIED IN THE AWC AND IMPLEMENT A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH FINRA RULES.

Allegations: FINRA ALLEGED THAT DURING THE PERIOD FROM MAY 31, 2006 THROUGH FEBRUARY 28, 2008 ("RELEVANT PERIOD"), EXCEPT AS OTHERWISE NOTED, HSBC SECURITIES VIOLATED CERTAIN NASD, FINRA, AND MSRB RULES BY (1) MAKING NEGLIGENT MISREPRESENTATIONS AND OMISSIONS OF MATERIAL FACTS TO CUSTOMERS CONCERNING THE SAFETY AND LIQUIDITY OF AUCTION RATE SECURITIES ("ARS"); (2) USING ADVERTISING AND MARKETING MATERIALS THAT WERE NOT FAIR AND BALANCED AND DID NOT PROVIDE A SOUND BASIS FOR EVALUATING THE FACTS ABOUT PURCHASING ARS; (3) SELLING RESTRICTED, AND THEREFORE UNSUITABLE, ARS TO CERTAIN NON-QUALIFIED CUSTOMERS; (4) FAILING TO RETAIN CERTAIN EMAILS FROM MAY 2004 TO APRIL 2009, AND FAILING TO RETAIN CERTAIN INTERNAL INSTANT MESSAGES FROM FEBRUARY 2007 TO SEPTEMBER 2008; AND (5) FAILING TO MAINTAIN ADEQUATE SUPERVISORY PROCEDURES CONCERNING ITS SALES AND MARKETING ACTIVITIES REGARDING ARS AND ITS RETENTION OF CERTAIN EMAILS AND INSTANT MESSAGES. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING FINRA'S FINDINGS AND WITHOUT ADJUDICATION OF ANY ISSUE OF LAW OR FACT, HSBC SECURITIES CONSENTED, SOLELY FOR THE PURPOSE OF THIS PROCEEDING, TO THE ENTRY OF FINRA'S FINDINGS AND THE FOLLOWING SANCTIONS: A CENSURE AND FINE IN THE AMOUNT OF $1.5 MILLION; OFFERING TO REPURCHASE ELIGIBLE ARS FROM INVESTORS IN THE RELEVANT CLASS; MAKING BEST EFFORTS TO PROVIDE LIQUIDITY TO INVESTORS WHO PURCHASED ARS DURING THE RELEVANT PERIOD BUT WHO WERE NOT IN THE RELEVANT CLASS; FOR ANY INVESTOR IN THE RELEVANT CLASS WHO SOLD ELIGIBLE ARS BELOW PAR BETWEEN CERTAIN DATES, PAYING THE DIFFERENCE BETWEEN PAR AND THE SALE PRICE; ARBITRATING CLAIMS FOR CONSEQUENTIAL DAMAGES FILED BY ELIGIBLE INVESTORS IN THE RELEVANT CLASS UNDER FINRA'S SPECIAL ARBITRATION PROCEDURES; AND PROVIDING FINRA WITH CERTAIN REPORTS. THE SPECIFIC TERMS OF THE REPURCHASE OFFER ARE DEFINED IN THE AWC. Summary: IN DETERMINING THE SANCTIONS IN THIS MATTER, FINRA TOOK INTO ACCOUNT HSBC SECURITIES' VOLUNTARY REMEDIATION TO CUSTOMERS PRIOR TO THE ENTRY OF THE AWC, WHICH INCLUDED HSBC SECURITIES' VOLUNTARY REPURCHASE OF ARS FROM ITS CUSTOMERS IN 2008. AS OF JULY 2008, HSBC SECURITIES REPURCHASED MORE THAN 90 PERCENT OF ITS THEN CURRENT CUSTOMERS' ARS HOLDINGS AND IN OCTOBER 2008 OFFERED TO REPURCHASE ALL OF THE REMAINING ARS HELD IN THOSE CUSTOMERS' HSBC SECURITIES ACCOUNTS.

Allegations: THE FEDERAL RESERVE BANK OF CHICAGO (THE "RESERVE BANK") REVIEWED AND ASSESSED THE EFFECTIVENESS OF HSBC NORTH AMERICA HOLDINGS, INC'S. ("HNAH") CORPORATE GOVERNANCE AND COMPLIANCE RISK MANAGEMENT PRACTICES, POLICIES, AND INTERNAL CONTROLS, AND IDENTIFIED DEFICIENCIES. HNAH AND THE BOARD OF GOVERNORS MUTUALLY AGREED TO ENTER INTO A CONSENT CEASE AND DESIST ORDER (THE "ORDER"). PURSUANT TO SECTIONS 8(B)(1) AND (3) OF THE FDI ACT (12U.S.C. §§1818(B)(1) AND 1818(B)(3)), HNAH AND ITS INSTITUTION-AFFILIATED PARTIES SHALL CEASE AND DESIST AND TAKE AFFIRMATIVE ACTION WITH RESPECT TO THE DEFICIENCIES DOCUMENTED IN THE ORDER. Status: Final Sanction Detail: CONSENT CEASE AND DESIST ORDER REQUIRING COMPLIANCE WITH THE PROVISIONS LISTED IN THE SUMMARY SECTION OF THIS DRP. Summary: THE RESERVE BANK REVIEWED AND ASSESSED THE EFFECTIVENESS OF HNAH'S CORPORATE GOVERNANCE AND COMPLIANCE RISK MANAGEMENT PRACTICES, POLICIES, AND INTERNAL CONTROLS, AND IDENTIFIED THE FOLLOWING AS CORRECTIVE ACTIONS TO BE TAKEN: SOURCE OF STRENGTH - THE BOARD OF DIRECTORS OF HNAH SHALL TAKE STEPS TO FULLY UTILIZE HNAH'S FINANCIAL AND MANAGERIAL RESOURCES, PURSUANT TO SECTION 225.4(A) OF REGULATION Y OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (12 C.F.R. §225.4(A)), TO SERVE AS A SOURCE OF STRENGTH TO THE BANKS. BOARD OVERSIGHT - WITHIN 30 DAYS OF THE ORDER, HNAH'S BOARD OF DIRECTORS SHALL SUBMIT TO THE RESERVE BANK AN ACCEPTABLE WRITTEN PLAN TO STRENGTHEN BOARD OVERSIGHT OF HNAH'S COMPLIANCE RISK MANAGEMENT PROGRAM. REGIONAL COMPLIANCE OFFICER - WITHIN 60 DAYS OF THE ORDER, HNAH'S BOARD OF DIRECTORS SHALL TAKE SUCH ACTIONS AS ARE NECESSARY TO EMPLOY A PERMANENT FULL-TIME REGIONAL COMPLIANCE OFFICER WITH DEMONSTRATED KNOWLEDGE AND EXPERIENCE IN MANAGING A COMPLIANCE RISK MANAGEMENT PROGRAM AT AN ENTITY WITH A COMPLEX COMPLIANCE PROFILE. COMPLIANCE RISK ASSESSMENT - WITHIN 30 DAYS OF THE ORDER, HNAH'S BOARD OF DIRECTORS SHALL SUBMIT TO THE RESERVE BANK A WRITTEN FIRMWIDE COMPLIANCE RISK ASSESSMENT. COMPLIANCE RISK MANAGEMENT PROGRAM - WITHIN 60 DAYS OF THE SUBMISSION OF THE FIRMWIDE COMPLIANCE RISK ASSESSMENT, HNAH'S BOARD OF DIRECTORS SHALL SUBMIT AN ACCEPTABLE WRITTEN PLAN TO THE RESERVE BANK TO IMPROVE GOVERNANCE, STRUCTURE, AND OPERATIONS OF THE COMPLIANCE RISK MANAGEMENT PROGRAM. BSA/AML COMPLIANCE - WITHIN 10 DAYS OF THE ORDER, HNAH'S BOARD OF DIRECTORS SHALL RETAIN AN INDEPENDENT CONSULTANT ACCEPTABLE TO THE RESERVE BANK TO COMPLETE A REVIEW OF THE EFFECTIVENESS OF THE FIRMWIDE BSA/AML COMPLIANCE PROGRAM ADOPTED BY HNAH AND PREPARE A WRITTEN REPORT OF FINDINGS AND RECOMMENDATIONS. SUSPICIOUS ACTIVITY MONITORING AND REPORTING - WITHIN 60 DAYS OF COMPLETION OF THE BSA/AML COMPLIANCE REVIEW, HNAH SHALL SUBMIT TO THE RESERVE BANK AN ACCEPTABLE WRITTEN PROGRAM DESIGNED TO REASONABLY ENSURE PROPER REPORTING BY HNAH AND ITS SUBSIDIARIES OF ALL KNOWN OR SUSPECTED VIOLATIONS OF LAW OR SUSPICIOUS TRANSACTIONS TO LAW ENFORCEMENT AND SUPERVISORY AUTHORITIES. PROGRESS REPORTS - WITHIN 30 DAYS AFTER THE END OF EACH CALENDAR QUARTER FOLLOWING THE DATE OF THE ORDER, HNAH'S BOARD OF DIRECTORS SHALL SUBMIT TO THE RESERVE BANK WRITTEN PROGRESS REPORTS DETAILING THE FORM AND MANNER OF ALL ACTIONS TAKEN TO SECURE COMPLIANCE WITH THE ORDER. APPROVAL AND IMPLEMENTATION OF PLANS, PROGRAM, AND ENGAGEMENT LETTER - HNAH SHALL SUBMIT WRITTEN PLANS AND A PROGRAM THAT ARE ACCEPTABLE TO THE RESERVE BANK WITHIN THE APPLICABLE TIME PERIODS SET FORTH IN THE ORDER.

Allegations: THE COMPTROLLER OF THE CURRENCY OF THE UNITED STATES OF AMERICA ("COMPTROLLER"), THROUGH HIS NATIONAL BANK EXAMINERS AND OTHER STAFF OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY ("OCC"), CONDUCTED AN EXAMINATION AND INVESTIGATION OF THE PAYMENTS AND CASH MANAGEMENT ("PCM"), GLOBAL BANKNOTES, AND FOREIGN CORRESPONDENT OPERATIONS OF HSBC BANK USA, N.A., MCLEAN, VIRGINIA ("BANK"). THE OCC HAS IDENTIFIED DEFICIENCIES IN THE BANK'S INTERNAL CONTROLS FOR THESE AREAS AS WELL AS ITS OVERALL PROGRAM FOR BANK SECRECY ACT/ANTI-MONEY LAUNDERING ("BSA/AML") COMPLIANCE. Status: Final Sanction Detail: CONSENT CEASE AND DESIST ORDER ISSUED BY THE COMPTROLLER OF THE CURRENCY OF THE UNITED STATES OF AMERICA THROUGH HIS NATIONAL BANK EXAMINERS AND OTHER STAFF OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY ("OCC"). THE BANK COMMITTED TO TAKING ALL NECESSARY STEPS TO REMEDY THE DEFICIENCIES IDENTIFIED BY THE OCC, AND ENHANCE THE BANK'S BSA/AML COMPLIANCE PROGRAM. Summary: THE OCC CONDUCTED AN EXAMINATION AND INVESTIGATION OF THE PCM, GLOBAL BANKNOTES, AND FOREIGN CORRESPONDENT OPERATION OF THE BANK AND IDENTIFIED THE FOLLOWING AS CORRECTIVE ACTIONS TO BE TAKEN: COMPLIANCE COMMITTEE - THE BOARD SHALL MAINTAIN A COMPLIANCE COMMITTEE OF AT LEAST THREE (3) DIRECTORS, OF WHICH AT LEAST TWO (2) MAY NOT BE EMPLOYEES OR OFFICERS OF THE BANK OR ANY OF ITS SUBSIDIARIES OR AFFILIATES. THE COMMITTEE SHALL BE RESPONSIBLE FOR MONITORING AND COORDINATING THE BANK'S ADHERENCE TO THE PROVISIONS OF THE ORDER. COMPREHENSIVE BSA/AML ACTION PLAN - WITHIN 60 DAYS OF THE ORDER, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE A PLAN CONTAINING A COMPLETE DESCRIPTION OF THE ACTIONS THAT ARE NECESSARY AND APPROPRIATE TO ACHIEVE FULL COMPLIANCE WITH THE ORDER. MANAGEMENT - WITHIN FIFTEEN (15) DAYS OF THE ORDER, THE BOARD SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND EXAMINER-IN-CHARGE A PLAN TO RECRUIT, HIRE, APPOINT, AND RETAIN A QUALIFIED, PERMANENT REGIONAL COMPLIANCE OFFICER AND A QUALIFIED, PERMANENT BSA OFFICER. REVIEW OF BSA COMPLIANCE PROGRAM - WITHIN TEN (10) DAYS OF THE ORDER, THE BANK SHALL RETAIN AN INDEPENDENT CONSULTANT TO CONDUCT AN INDEPENDENT REVIEW OF THE BANK'S BSA/AML COMPLIANCE PROGRAM. BSA COMPLIANCE PROGRAM - WITHIN 90 DAYS OF THE ORDER, THE BOARD AND EXECUTIVE MANAGEMENT SHALL ENSURE THAT A BSA/AML PROGRAM IS IN PLACE WHICH MEETS SPECIFIC CRITERIA OUTLINED IN THE ORDER. MANAGEMENT INFORMATION - WITHIN 90 DAYS OF THIS ORDER, THE BOARD SHALL ENSURE THAT BANK MANAGEMENT CONDUCTS A MANAGEMENT INFORMATION SYSTEM ASSESSMENT, AND DEVELOPS A PLAN THAT WILL ENABLE MANAGEMENT TO MORE EFFECTIVELY IDENTIFY, MONITOR, AND MANAGE THE BANK'S BSA RISKS ON A TIMELY BASIS. CDD AND EDD INFORMATION - THE BANK SHALL DEVELOP AND IMPLEMENT APPROPRIATE POLICIES AND PROCEDURES FOR GATHERING CUSTOMER DUE DILIGENCE AND ENHANCED DUE DILIGENCE INFORMATION. MONITORING - WITHIN 60 DAYS OF THE ORDER, THE BANK SHALL SUBMIT REVISED POLICIES AND PROCEDURES FOR WIRE MONITORING USING ITS CURRENT WIRE MONITORING SYSTEM TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE. SUSPICIOUS ACTIVITY REPORTING - THE BANK SHALL DEVELOP AND MAINTAIN A WRITTEN PROGRAM OF POLICIES AND PROCEDURES TO ENSURE, PURSUANT TO 12 C.F.R. § 21.11, THE TIMELY AND APPROPRIATE REVIEW AND DISPOSITIONING OF SUSPICIOUS ACTIVITY ALERTS, AND THE TIMELY FILING OF SARS. ACCOUNT/TRANSACTION ACTIVITY REVIEW ("LOOK-BACK") - THE BANK SHALL RETAIN ON OR MORE INDEPENDENT CONSULTANTS TO CONDUCT AN INDEPENDENT REVIEW OF ACCOUNT AND TRANSACTION ACTIVITY ("LOOK-BACK") COVERING AREAS TO BE SPECIFIED IN WRITING BY THE EXAMINER-IN-CHARGE. RESTRICTIONS ON GROWTH, NEW PRODUCTS AND HIGH-RISK LINES OF BUSINESS - THE BANK INFORMED THE OCC THAT IT IS EXITING THE GLOBAL BANKNOTES LINE OF BUSINESS FOR NON-DOMESTIC CUSTOMERS. IF, IN THE FUTURE, THE BANK INTENDS TO RE-ENTER THE INTERNATIONAL BULK CASH LINE OF BUSINESS, THE BANK SHALL NOTIFY THE EXAMINER-IN-CHARGE OF ITS PLAN IN WRITING AND OBTAIN WRITTEN SUPERVISORY NON-OBJECTION PRIOR TO COMMENCING RE-ENTRY. REMOTE DEPOSIT CAPTURE - THE BANK SHALL ESTABLISH CONTROLS, COMMENSURATE WITH ITS BSA/AML RISK, OVER THE USAGE OF RDC BY FOREIGN CORRESPONDENT CUSTOMERS, AND THE BANK'S MONITORING OF RDC TRANSACTIONS. BSA TRAINING - WITHIN 90 DAYS OF THIS ORDER, THE BANK SHALL DEVELOP, IMPLEMENT, AND THEREAFTER ADHERE TO A COMPREHENSIVE TRAINING PROGRAM FOR ALL APPROPRIATE OPERATIONAL AND SUPERVISORY PERSONNEL TO ENSURE THEIR AWARENESS OF THEIR RESPONSIBILITY FOR COMPLIANCE WITH THE REQUIREMENTS OF THE OFFICE OF FOREIGN ASSETS CONTROL ("OFAC") AND THE BSA, INCLUDING REPORTING REQUIREMENTS ASSOCIATED WITH SARS, PURSUANT TO 12 C.F.R. PART 21, SUBPART B, REGARDLESS OF THE SIZE OF THE RELATIONSHIP OR TYPE OF CUSTOMER INVOLVED. BSA INDEPENDENT TESTING AND AUDIT - THE BANK SHALL DEVELOP AND MAINTAIN AN EFFECTIVE PROGRAM TO AUDIT THE BANK'S BSA/AML COMPLIANCE PROGRAM.

Allegations: HBUS ALLEGEDLY PROCESSED 3 FUNDS TRANSFERS FOR THE ECONOMIC BENEFIT OF PARTIES DESIGNATED AS SPECIALLY DESIGNATED GLOBAL TERRORISTS (SDGTS). THE AGGRAVATING FACTORS IENTIFIED BY OFAC WERE: (1) HBUS DID NOT SCREEN TRANSACTION INSTRUCTIONS APPROPRIATELY AT THE TIME OF THE FIRST APPARENT VIOLATION. (2) HBUS COMPLIANCE MANAGERS FOR OFAC WERE AWARE OF THE FIRST VIOLATION AND SHOULD HAVE BEEN AWARE OF THE SECOND AND THIRD APPARENT VIOLATIONS. (3) HBUS INITIALLY PROVIDED AN INCOMPLETE RESPONSE TO AN ADMINISTRATIVE SUBPOENA. Status: Final Sanction Detail: DISPOSITION OF THE MATTER RESULTED IN A FINE OF $32400. THE WHOLE FINE WAS LEVIED ON HBUS. PAYMENT OF THE FINE WAS TMADE TIMELY, WITHIN 30 DAYS FROM DECEMBER 12, 2013.

Allegations: THE U.K. FINANCIAL CONDUCT AUTHORITY ("FCA") ALLEGED FAILINGS IN HSBC BANK PLC'S ("HSBC") SYSTEMS AND CONTROLS IN ITS LONDON G10 SPOT FX VOICE TRADING BUSINESS. IN PARTICULAR, IT ALLEGED THAT HSBC DID NOT EXERCISE ADEQUATE AND EFFECTIVE CONTROL FROM JANUARY 1, 2008 TO OCTOBER 15, 2013 OVER RISKS ASSOCIATED WITH CONFIDENTIALITY, CONFLICTS OF INTEREST AND TRADING CONDUCT ARISING FROM THIS BUSINESS. Status: Final Sanction Detail: ON NOVEMBER 11, 2014, THE FCA REACHED A SETTLEMENT WITH HSBC BANK PLC ("HSBC") IN CONNECTION WITH ITS INVESTIGATION INTO THE G10 SPOT FX VOICE TRADING BUSINESS. THE FCA ISSUED A FINAL NOTICE, FIRM REFERENCE NUMBER 114216, FINDING THAT HSBC'S SYSTEM AND CONTROL FAILINGS CONSTITUTED A BREACH OF PRINCIPLE 3 OF THE FCA'S PRINCIPLES FOR BUSINESSES, AND ACCORDINGLY IMPOSED A FINANCIAL PENALTY OF £216,363,000 (£58,863,000 OF WHICH IS ATTRIBUTABLE TO THE BREACH OF PRINCIPLE 3, AND £157,500,000 OF WHICH IS FOR THE PURPOSES OF "CREDIBLE DETERRENCE"). ON NOVEMBER 11, 2014, THE BLOOMBERG EXCHANGE RATE, GBP HISTORICAL PRICE WAS 1.5919, WHICH CONVERTS THE £216,363,000 FINE TO APPROXIMATELY $344,428,259.70. Summary: ON NOVEMBER 11, 2014, THE FCA REACHED A SETTLEMENT WITH HSBC BANK PLC ("HSBC") IN CONNECTION WITH ITS INVESTIGATION INTO THE G10 SPOT FX VOICE TRADING BUSINESS. THE FCA ISSUED A FINAL NOTICE, FIRM REFERENCE NUMBER 114216, FINDING THAT HSBC'S SYSTEM AND CONTROL FAILINGS CONSTITUTED A BREACH OF PRINCIPLE 3 OF THE FCA'S PRINCIPLES FOR BUSINESSES, AND ACCORDINGLY IMPOSED A FINANCIAL PENALTY OF £216,363,000 (£58,863,000 OF WHICH IS ATTRIBUTABLE TO THE BREACH OF PRINCIPLE 3, AND £157,500,000 OF WHICH IS FOR THE PURPOSES OF "CREDIBLE DETERRENCE"). ON NOVEMBER 11, 2014, THE BLOOMBERG EXCHANGE RATE, GBP HISTORICAL PRICE WAS 1.5919, WHICH CONVERTS THE £216,363,000 FINE TO APPROXIMATELY $344,428,259.70.

Allegations: THE OFFICE OF THE INSURANCE COMMISSIONER FOR THE STATE OF WASHINGTON FOUND THAT THE FIRM VIOLATED WAC-284-17-473 BY NOT AFFILIATING 4 INSURANCE PRODUCERS WHO CONDUCTED BUSINESS WITHIN THE STATE. THE FIRM HAS SINCE AFFILIATED ALL AGENTS LICENSED TO SELL INSURANCE IN THE STATE. THE FIRM ENTERED INTO A CONSENT ORDER LEVYING A FINE AND THE IMPOSITION OF A $10,000 FINE. Status: Final Sanction Detail: TOTAL FINE- $10,000.00. PORTION AGAINST APPLICANT -$10,000.00 WAS PAID ON 4/22/21. Summary: CONSENT ORDER WAS AGREED TO BY APPLICANT ON 4/22/2021.

Allegations: US REGULATORY AUTHORITIES' INVESTIGATIONS REGARDING INADEQUATE COMPLIANCE WITH ANTI-MONEY LAUNDERING AND SANCTIONS LAWS. Status: Final Sanction Detail: ON DECEMBER 11, 2012, HSBC HOLDINGS PLC ANNOUNCED THAT HSBC BANK USA, N.A., HAD IN RELATION TO INVESTIGATIONS REGARDING INADEQUATE COMPLIANCE WITH ANTI-MONEY LAUNDERING AND SANCTIONS LAWS ENTERED INTO (I) AN AGREEMENT AND CONSENT ORDERS WITH THE OCC,(II) A CONSENT AND ASSESSMENT WITH THE UNITED STATES DEPARTMENT OF THE TREASURY'S FINANCIAL CRIMES ENFORCEMENT NETWORK, (III) A DEFERRED PROSECUTION AGREEMENT AMONG HSBC BANK USA, N.A., HSBC HOLDINGS PLC, THE UNITED STATES DEPARTMENT OF JUSTICE, THE UNITED STATES ATTORNEY'S OFFICE FOR THE EASTERN DISTRICT OF NEW YORK, AND THE UNITED STATES ATTORNEY'S OFFICE FOR THE NORTHERN DISTRICT OF WEST VIRGINIA; AND, HSBC HOLDINGS PLC ENTERED IN TO A DEFERRED PROSECUTION AGREEMENT WITH THE DISTRICT ATTORNEY OF THE COUNTY OF NEW YORK, (II) CONSENTED TO A CEASE AND DESIST ORDER AND ALONG WITH HSBC NORTH AMERICA HOLDINGS CONSENTED TO A MONETARY PENALTY ORDER WITH THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. UNDER THESE AGREEMENTS, HSBC HOLDINGS PLC AND ITS SUBSIDIARIES HAVE MADE PAYMENTS TOTALING $1.921 BILLION, CONTINUE TO COOPERATE FULLY WITH REGULATORY AND LAW ENFORCEMENT AUTHORITIES, AND TAKE FURTHER ACTION TO STRENGTHEN ITS COMPLIANCE POLICIES AND PROCEDURES. HSBC BANK USA, N.A. MAY NOT DIRECTLY OR INDIRECTLY ACQUIRE CONTROL OF, OR HOLD AN INTEREST IN, ANY NEW FINANCIAL SUBSIDIARY, NOR COMMENCE A NEW ACTIVITY IN ITS EXISTING FINANCIAL SUBSIDIARY, UNLESS IT RECEIVES PRIOR APPROVAL FROM THE OCC.

Allegations: THE OCC ALLEGES THAT HSBC ENGAGED IN UNSAFE OR UNSOUND BANKING PRACTICES IN CONNECTION WITH ITS MORTGAGE LOAN SERVICING AND FORECLOSURE PRACTICES. Status: Final Sanction Detail: HSBC AGREED TO ENTER INTO CEASE AND DESIST ORDERS WITH THE FEDERAL RESERVE BOARD AND OFFICE OF THE COMPTROLLER OF THE CURRENCY ON APRIL 13, 2011, TO REMEDIATE ITS MORTGAGE AND FORECLOSURE PRACTICES. Summary: IN BRIEF, THE OCC CONSENT ORDER REQUIRES THE FOLLOWING: THE HSBC BOARD OF DIRECTORS MAINTAIN A COMPLIANCE COMMITTEE WHICH SHALL SUBMIT A PROGRESS REPORT TO THE BOARD DETAILING ACTIONS TAKEN TO COMPLY WITH THIS ORDER, AND THE RESULTS AND STATUS OF THOSE ACTIONS. WITHIN SIXTY DAYS, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE A PLAN DESCRIBING THE ACTIONS NECESSARY AND APPROPRIATE TO ACHIEVE COMPLIANCE WITH THIS ORDER. WITHIN SIXTY DAYS, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE A COMPLIANCE PROGRAM TO ENSURE THAT THE MORTGAGE SERVICING AND FORECLOSURE OPERATIONS COMPLY WITH ALL APPLICABLE LEGAL REQUIREMENTS, OCC SUPERVISORY GUIDANCE, AND THE REQUIREMENTS OF THIS ORDER AND ARE CONDUCTED IN A SAFE AND SOUND MANNER. WITHIN SIXTY DAYS, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE POLICIES AND PROCEDURES FOR OUTSOURCING FORECLOSURE OR RELATED FUNCTIONS AND PROPERTY MANAGEMENT FUNCTIONS FOR RESIDENTIAL REAL ESTATE ACQUIRED THROUGH OR IN LIEU OF FORECLOSURE, TO ANY AGENT, INDEPENDENT CONTRACTOR, CONSULTING FIRM, LAW FIRM, PROPERTY MANAGEMENT FIRM, OR OTHER THIRD-PARTY. WITHIN SIXTY DAYS, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE A PLAN TO ENSURE APPROPRIATE CONTROLS AND OVERSIGHT OF THE BANK'S ACTIVITIES WITH RESPECT TO THE MORTGAGE ELECTRONIC REGISTRATION SYSTEM AND COMPLIANCE WITH MERSCORP'S MEMBERSHIP RULES, TERMS, AND CONDITIONS. WITHIN FORTY-FIVE DAYS, THE BANK SHALL RETAIN AN INDEPENDENT CONSULTANT TO CONDUCT AN INDEPENDENT REVIEW OF CERTAIN RESIDENTIAL FORECLOSURE ACTIONS REGARDING INDIVIDUAL BORROWERS WITH RESPECT TO THE BANK'S MORTGAGE SERVICING PORTFOLIO. THE INDEPENDENT CONSULTANT SHALL PREPARE A REPORT DETAILING THE FINDINGS OF THE FORECLOSURE REVIEW, WHICH SHALL BE COMPLETED WITHIN THIRTY DAYS OF COMPLETION OF THE FORECLOSURE REVIEW. WITHIN FORTY-FIVE DAYS OF SUBMISSION OF THE FORECLOSURE REPORT TO THE DEPUTY COMPTROLLER, EXAMINER-IN-CHARGE, AND THE BOARD, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE A PLAN, ACCEPTABLE TO THE OCC, TO REMEDIATE ALL FINANCIAL INJURY TO BORROWERS CAUSED BY ANY ERRORS, MISREPRESENTATIONS, OR OTHER DEFICIENCIES IDENTIFIED IN THE FORECLOSURE REPORT. WITHIN SIXTY DAYS AFTER THE OCC PROVIDES SUPERVISORY NON-OBJECTION TO THE PLAN, THE BANK SHALL MAKE ALL PAYMENTS AND PROVIDE ALL CREDITS REQUIRED BY SUCH PLAN, AND PROVIDE THE OCC WITH A REPORT DETAILING SUCH PAYMENTS AND CREDITS. WITHIN SIXTY DAYS, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE AN ACCEPTABLE PLAN FOR OPERATION OF ITS MANAGEMENT INFORMATION SYSTEMS ("MIS") FOR FORECLOSURE AND LOSS MITIGATION OR LOAN MODIFICATION ACTIVITIES TO ENSURE THE TIMELY DELIVERY OF COMPLETE AND ACCURATE INFORMATION TO PERMIT EFFECTIVE DECISION-MAKING. WITHIN SIXTY DAYS, THE BANK SHALL SUBMIT TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE A PLAN, ALONG WITH A TIMELINE FOR ENSURING EFFECTIVE COORDINATION OF COMMUNICATIONS WITH BORROWERS, RELATED TO LOSS MITIGATION OR LOAN MODIFICATION AND FORECLOSURE ACTIVITIES. WITHIN NINETY DAYS, THE BANK SHALL CONDUCT A COMPREHENSIVE ASSESSMENT OF THE BANK'S RISKS IN MORTGAGE SERVICING OPERATIONS. THE BANK SHALL SUBMIT THE PLANS, PROGRAMS, POLICIES, AND PROCEDURES REQUIRED BY THIS ORDER FOR REVIEW AND DETERMINATION OF NO SUPERVISORY OBJECTION TO THE DEPUTY COMPTROLLER AND THE EXAMINER-IN-CHARGE WITHIN THE APPLICABLE TIME PERIODS. THE BANK SHALL ADOPT THE PLANS, PROGRAMS, POLICIES, AND PROCEDURES REQUIRED BY THIS ORDER UPON SUBMISSION TO THE OCC, AND SHALL IMMEDIATELY MAKE ANY REVISIONS REQUESTED BY THE DEPUTY COMPTROLLER OR THE EXAMINER-IN-CHARGE. WITHIN THIRTY DAYS AFTER THE END OF EACH CALENDAR QUARTER FOLLOWING THE DATE OF THIS ORDER, THE BANK SHALL SUBMIT TO THE OCC A WRITTEN PROGRESS REPORT DETAILING THE FORM AND MANNER OF ALL ACTIONS TAKEN TO SECURE COMPLIANCE WITH THE PROVISIONS OF THIS ORDER AND THE RESULTS THEREOF.

Allegations: THE FRB ALLEGES THAT HSBC ENGAGED IN UNSAFE OR UNSOUND BANKING PRACTICES IN CONNECTION WITH ITS MORTGAGE LOAN SERVICING AND FORECLOSURE PRACTICES. Status: Final Sanction Detail: HSBC AGREED TO ENTER INTO CEASE AND DESIST ORDERS WITH THE FEDERAL RESERVE BOARD AND OFFICE OF THE COMPTROLLER OF THE CURRENCY ON APRIL 13, 2011, TO REMEDIATE ITS MORTGAGE AND FORECLOSURE PRACTICES Summary: IN BRIEF, THE FRB CONSENT ORDER REQUIRES THE FOLLOWING: THE BOARD OF DIRECTORS OF HNAH SHALL UTILIZE HNAH'S FINANCIAL AND MANAGERIAL RESOURCES TO SERVE AS A SOURCE OF STRENGTH TO THE BANK TO ENSURE THAT THE BANK COMPLIES WITH THE CONSENT ORDER ISSUED BY THE OCC. WITHIN 60 DAYS, THE BOARDS OF DIRECTORS OF HNAH AND HBIO SHALL SUBMIT A PLAN TO STRENGTHEN THE BOARDS' OVERSIGHT OF THE MORTGAGE SERVICING COMPANIES. WITHIN 45 DAYS, HNAH AND HBIO SHALL RETAIN INDEPENDENT CONSULTANT(S) TO CONDUCT A REVIEW OF CERTAIN RESIDENTIAL MORTGAGE FORECLOSURE ACTIONS REGARDING INDIVIDUAL BORROWERS. WITHIN 60 DAYS, HBIO SHALL SUBMIT A PLAN, ALONG WITH A TIMELINE, FOR STRENGTHENING COORDINATION OF COMMUNICATIONS BETWEEN THE MORTGAGE SERVICING COMPANIES AND BORROWERS RELATED TO LOSS MITIGATION AND FORECLOSURE ACTIVITIES. WITHIN 60 DAYS, HBIO SHALL SUBMIT POLICIES AND PROCEDURES FOR THE OUTSOURCING OF ANY RESIDENTIAL MORTGAGE LOAN SERVICING, LOSS MITIGATION, OR FORECLOSURE FUNCTIONS, BY THE MORTGAGE SERVICING COMPANIES TO ANY THIRD PARTY. WITHIN 60 DAYS, HNAH SHALL SUBMIT A PLAN TO ENHANCE ITS ENTERPRISE-WIDE COMPLIANCE PROGRAM WITH RESPECT TO ITS OVERSIGHT OF RESIDENTIAL MORTGAGE LOAN SERVICING, LOSS MITIGATION, AND FORECLOSURE ACTIVITIES AND OPERATIONS. WITHIN 60 DAYS, HBIO SHALL SUBMIT A COMPLIANCE PROGRAM AND TIMELINE TO ENSURE THAT THE OPERATIONS OF THE MORTGAGE SERVICING COMPANIES COMPLY WITH THE LEGAL REQUIREMENTS, AS WELL AS THE MORTGAGE SERVICING COMPANIES' INTERNAL POLICIES, PROCEDURES, AND PROCESSES AND ARE CONDUCTED IN A SAFE AND SOUND MANNER. WITHIN 60 DAYS, HBIO SHALL SUBMIT A PLAN TO ENSURE APPROPRIATE CONTROLS AND OVERSIGHT OF THE MORTGAGE SERVICING COMPANIES' ACTIVITIES WITH RESPECT TO MERS AND COMPLIANCE WITH MERS' MEMBERSHIP RULES, TERMS, AND CONDITIONS. WITHIN 60 DAYS, HBIO SHALL SUBMIT A PLAN AND TIMELINE FOR THE REVIEW AND REMEDIATION OF THE MORTGAGE SERVICING COMPANIES' MANAGEMENT INFORMATION SYSTEMS. WITHIN 60 DAYS, HBIO SHALL SUBMIT A PLAN AND TIMELINE TO IMPROVE THE TRAINING OF ALL APPROPRIATE OFFICERS AND STAFF OF THE MORTGAGE SERVICING COMPANIES REGARDING THE LEGAL REQUIREMENTS, SUPERVISORY GUIDANCE OF THE BOARD OF GOVERNORS, AND THE MORTGAGE SERVICING COMPANIES' INTERNAL POLICIES AND PROCEDURES REGARDING RESIDENTIAL MORTGAGE LOAN SERVICING, LOSS MITIGATION, AND FORECLOSURE. WITHIN 10 DAYS, HNAH AND HBIO SHALL RETAIN AN INDEPENDENT CONSULTANT TO CONDUCT AN ASSESSMENT OF THE MORTGAGE SERVICING COMPANIES' RISKS. THE INDEPENDENT CONSULTANT SHALL PREPARE A RISK ASSESSMENT AND PROVIDE IT TO HNAH AND HBIO WITHIN 90 DAYS, AND HNAH AND HBIO SHALL PROVIDE IT TO THE RESERVE BANK AT THE SAME TIME THAT IT IS PROVIDED TO HNAH AND HBIO. WITHIN 60 DAYS OF SUBMISSION OF THE RISK ASSESSMENT, HNAH SHALL SUBMIT A PLAN TO ENHANCE ITS ERM PROGRAM. WITHIN 60 DAYS OF SUBMISSION OF THE RISK ASSESSMENT, HNAH AND HBIO SHALL JOINTLY SUBMIT A RISK MANAGEMENT PROGRAM FOR THE MORTGAGE SERVICING COMPANIES. WITHIN 60 DAYS, HNAH SHALL SUBMIT A PLAN TO ENHANCE THE INTERNAL AUDIT PROGRAM WITH RESPECT TO RESIDENTIAL MORTGAGE LOAN SERVICING, LOSS MITIGATION, AND FORECLOSURE ACTIVITIES AND OPERATIONS. WITHIN 60 DAYS, HBIO SHALL SUBMIT AN ENHANCED WRITTEN INTERNAL AUDIT PROGRAM TO PERIODICALLY REVIEW COMPLIANCE WITH APPLICABLE THE LEGAL REQUIREMENTS AND SUPERVISORY GUIDANCE OF THE BOARD OF GOVERNORS AT THE MORTGAGE SERVICING COMPANIES. WITHIN 10 DAYS OF APPROVAL BY THE RESERVE BANK, HNAH AND HBIO, AS APPLICABLE, SHALL ADOPT THE APPROVED PLANS, PROGRAMS, POLICIES, AND PROCEDURES. WITHIN 30 DAYS AFTER THE END OF EACH CALENDAR QUARTER, HNAH'S AND HBIO'S BOARDS OF DIRECTORS SHALL JOINTLY SUBMIT PROGRESS REPORTS DETAILING THE FORM AND MANNER OF ALL ACTIONS TAKEN TO SECURE COMPLIANCE THIS ORDER AND THE RESULTS THEREOF. WITHIN 15 MONTHS AFTER THE DATE OF THIS ORDER, HNAH AND HBIO SHALL SUBMIT A VALIDATION REPORT PREPARED BY AN INDEPENDENT THIRD-PARTY CONSULTANT WITH RESPECT TO COMPLIANCE WITH THE ORDER DURING THE FIRST YEAR AFTER THE ORDER BECOMES EFFECTIVE.

Allegations: THE FRB ALLEGES THAT HSBC ENGAGED IN UNSAFE OR UNSOUND BANKING PRACTICES IN CONNECTION WITH ITS MORTGAGE LOAN SERVICING AND FORECLOSURE PRACTICES. Status: Final Sanction Detail: PURSUANT TO THE FRB AND OCC AMENDED CONSENT ORDERS DATED FEBRUARY 28, 2013, HSBC WILL MAKE CASH PAYMENTS TOTALLING $249,901,413. SUCH PAYMENTS WILL BE APPLIED TO A SETTLEMENT FUND AND ALSO BE USED TO PROVIDE OTHER ASSISTANCE TO HELP MORTGAGE BORROWERS. Summary: THE APRIL 2011 OCC AND FRB CONSENT ORDERS WERE AMENDED, REQUIRING HNAH, HBIO AND HSBC BANK TO PAY $96,540,359 INTO A QUALIFIED SETTLEMENT FUND, ESTABLISHED PURSUANT TO THE AMENDMENT, FROM WHICH PAYMENTS WILL BE MADE ACCORDING TO A DISTRIBUTION PLAN DEVELOPED BY THE FRB AND THE OCC. HNAH, HBIO AND HSBC BANK SHALL ALSO PROVIDE LOSS MITIGATION AND FORECLOSURE PREVENTION TOTALLING $153,361,054.

Allegations: THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (THE "FEDERAL RESERVE") HAS CONDUCTED AN INVESTIGATION INTO CERTAIN FOREIGN EXCHANGE ("FX") PRACTICES OF HSBC HOLDINGS PLC ("HOLDINGS"), HSBC NORTH AMERICA HOLDINGS INC. ("HNAH") AND CERTAIN AFFILIATES, COLLECTIVELY REFERRED TO AS "HSBC." THE FEDERAL RESERVE'S REVIEW IDENTIFIED CERTAIN DEFICIENCIES IN HSBC'S HISTORIC OVERSIGHT OF AND CONTROL OVER ITS FX BUSINESS. Status: Final Sanction Detail: PURSUANT TO THE FEDERAL DEPOSIT INSURANCE ACT, THE FEDERAL RESERVE ISSUED A CONSENT ORDER TO CEASE AND DESIST AND ASSESSMENT OF A CIVIL MONEY PENALTY (THE "ORDER"). ACCORDINGLY, HSBC SHALL CEASE AND DESIST WITH RESPECT TO THE DEFICIENCIES DOCUMENTED IN THE ORDER AND TAKE AFFIRMATIVE ACTION RELATING TO INTERNAL CONTROLS AND COMPLIANCE OVERSIGHT OVER CERTAIN MARKETS ACTIVITY. ON SEPTEMBER 29, 2017, HSBC PAID A CIVIL MONEY PENALTY IN THE AMOUNT OF $175,296,000. Summary: THE FEDERAL RESERVE REVIEWED AND ASSESSED THE EFFECTIVENESS OF HSBC'S FX PRACTICES DURING THE PERIOD OCTOBER 2008 THROUGH OCTOBER 2013 AND FOUND CERTAIN DEFICIENCIES IN ITS CONTROL AND OVERSIGHT OVER ITS FX BUSINESS. THE FEDERAL RESERVE FOUND, AMONGST OTHER THINGS, THAT HSBC FAILED TO DETECT AND ADDRESS ITS TRADERS MISUSE OF CONFIDENTIAL CUSTOMER INFORMATION, AS WELL AS USE OF ELECTRONIC CHATROOMS TO COMMUNICATE WITH COMPETITORS ABOUT TRADING POSITIONS. THE FEDERAL RESERVE'S ORDER REQUIRES HSBC TO PAY A PENALTY IN THE AMOUNT OF $175,296,000 AND FURTHER IMPROVE ITS CONTROL AND COMPLIANCE RISK MANAGEMENT CONCERNING CERTAIN MARKETS ACTIVITIES. THIS INCLUDES: -THE SUBMISSION WITHIN 90 DAYS OF THE ORDER OF AN ENHANCED INTERNAL CONTROLS AND COMPLIANCE PROGRAM AND COMPLIANCE RISK MANAGEMENT PROGRAM FOR DESIGNATED MARKETS ACTIVITIES; -AN ANNUAL REVIEW OF COMPLIANCE PROGRAMS AND PROCEDURES FOR HSBC'S DESIGNATED MARKETS ACTIVITIES, THE RESULTS OF WHICH WILL NEED TO BE SUBMITTED TO THE FEDERAL RESERVE WITHIN NINETY DAYS OF THE CORRESPONDING ANNIVERSARY DATE OF THE ORDER; AND THE SUBMISSION WITHIN 90 DAYS OF THE ORDER OF AN ENHANCED WRITTEN INTERNAL AUDIT PROGRAM WITH RESPECT TO HSBC'S COMPLIANCE WITH APPLICABLE U.S. LAWS AND REGULATIONS AS WELL AS HSBC'S INTERNAL POLICIES AND PROCEDURES IN ITS DESIGNATED MARKETS ACTIVITIES.

Allegations: THE STATE OF WASHINGTON OFFICE OF INSURANCE COMMISSION ("OIC")ALLEGED THAT HSBC SECURITIES (USA) INC. ("HSBC") VIOLATED RCW48.17.597(1) BY FAILING TO REPORT ADMINISTRATIVE ACTIONS TAKEN AGAINST IT BY ITS PRIMARY REGULATOR WITH THIRTY DAYS. THE OIC ALSO ALLEGED THAT HSBC VIOLATED RCW 48.17.530 BY REPRESENTING IN ITS INITIAL APPLICATION THAT IT HAD NOT BEEN NAMED IN ANY FINRA VIOLATIONS AND REPORTABLE ACTIONS. THE OIC ALLEGED THAT HSBC PROVIDED AN INCORRECT CRD NUMBER ON IT APPLICATION. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING ANY VIOLATION, HSBC WAS FINED $7,000.00.

Allegations: NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES ALLEGED THAT HSBC VIOLATED SECTION 2110(A)(2) OF THE INSURANCE LAW IN ITS RENEWAL APPLICATIONS FOR AGENT'S LICENSE UNDER SECTION 2103(A) OF THE INSURANCE LAW FOR FAILING TO DISCLOSE CERTAIN REGULATORY MATTERS AND ARBITRATION AWARDS ENTERED AGAINST HSBC. Status: Final Sanction Detail: HSBC SECURITIES (USA) INC. WAIVED ITS RIGHT TO NOTICE AND A HEARING ON SAID CHARGE AND AGREED, IN LIEU OF ANY OTHER DISCIPLINARY ACTION WHICH MIGHT BE TAKEN BY THE NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES. HSBC AGREED TO FINE OF $27,500.00 AND TO TAKE ALL NECESSARY STEPS TO PREVENT THE RECURRENCE OF ANY SIMLIAR VIOLATIONS.

Allegations: ON JANUARY 18, 2018, THE U.S. DEPARTMENT OF JUSTICE (DOJ) ANNOUNCED THAT IT HAD ENTERED INTO A THREE-YEAR DEFERRED PROSECUTION AGREEMENT WITH HSBC HOLDINGS PLC TO RESOLVE THE DOJ'S INVESTIGATION INTO HSBC'S HISTORICAL FOREIGN EXCHANGE SALES AND TRADING ACTIVITIES WITHIN ITS GLOBAL MARKETS BUSINESS. THE AGREEMENT CONCERNS IMPROPER TRADING AND THE MISAPPROPRIATION OF CONFIDENTIAL CLIENT INFORMATION IN CONNECTION WITH TWO FOREIGN EXCHANGE TRANSACTIONS IN 2010 AND 2011. Status: Final Sanction Detail: THE DEFERRED PROSECUTION AGREEMENT REQUIRES HSBC HOLDINGS TO PAY A TOTAL OF $101.5 MILLION, INCLUDING A $63.1 MILLION FINE AND $38.4 MILLION IN RESTITUTION. HSBC HOLDINGS MADE THE $63.1 MILLION FINE PAYMENT ON JANUARY 23, 2018, AND IS REQUIRED TO PAY THE RESTITUTION WITHIN 30 DAYS AFTER EXECUTION OF THE AGREEMENT. Summary: ON JANUARY 18, 2018, THE U.S. DEPARTMENT OF JUSTICE (DOJ) ANNOUNCED THAT IT HAD ENTERED INTO A THREE-YEAR DEFERRED PROSECUTION AGREEMENT WITH HSBC HOLDINGS PLC TO RESOLVE THE DOJ'S INVESTIGATION INTO HSBC'S HISTORICAL FOREIGN EXCHANGE SALES AND TRADING ACTIVITIES WITHIN ITS GLOBAL MARKETS BUSINESS. THE AGREEMENT CONCERNS IMPROPER TRADING AND THE MISAPPROPRIATION OF CONFIDENTIAL CLIENT INFORMATION IN CONNECTION WITH TWO FOREIGN EXCHANGE TRANSACTIONS IN 2010 AND 2011. THE DEFERRED PROSECUTION AGREEMENT REQUIRES HSBC HOLDINGS TO PAY A TOTAL OF $101.5 MILLION, INCLUDING A $63.1 MILLION FINE AND $38.4 MILLION IN RESTITUTION. HSBC HOLDINGS MADE THE $63.1 MILLION FINE PAYMENT ON JANUARY 23, 2018, AND IS REQUIRED TO PAY THE RESTITUTION WITHIN 30 DAYS AFTER EXECUTION OF THE AGREEMENT.THE AGREEMENT, RECOGNIZING THAT HSBC HOLDINGS HAS ALREADY ENGAGED IN REMEDIAL MEASURES, REQUIRES HSBC HOLDINGS TO MONITOR ITS COMPLIANCE WITH THE AGREEMENT'S OBLIGATIONS AND PROVIDE ANNUAL REPORTS TO THE DOJ FOR THE TERM OF THE AGREEMENT. AMONG OTHER REQUIREMENTS, HSBC HOLDINGS ALSO AGREED TO FURTHER ENHANCE ITS COMPLIANCE PROGRAM AND INTERNAL CONTROLS IN THE GLOBAL MARKETS BUSINESS AND TO SELF-REPORT ANY POTENTIAL CRIMINAL MISCONDUCT.

Allegations: THE U.S. COMMODITY FUTURES TRADING COMMISSION ("CFTC") ALLEGED THAT HSBC BANK PLC ("HSBC"), PRINCIPALLY THROUGH TRADERS IN ITS LONDON G10 SPOT FX VOICE TRADING BUSINESS, ATTEMPTED TO MANIPULATE AND/OR AIDED TRADERS AT OTHER BANKS IN ATTEMPTING TO MANIPULATE CERTAIN FX BENCHMARKS, INCLUDING THE WM/REUTERS 4 P.M. LONDON FIX RATE, BETWEEN 2009 AND MID-2012. Status: Final Sanction Detail: ON NOVEMBER 11, 2014, THE CFTC REACHED A SETTLEMENT WITH HSBC BANK PLC ("HSBC") IN WHICH HSBC, WITHOUT ADMITTING OR DENYING THE FINDINGS OR CONCLUSIONS THEREIN, CONSENTED TO THE ENTRY OF AN ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTIONS 6(C)(4)(A) AND 6(D) OF THE COMMODITY EXCHANGE ACT, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS, CFTC DOCKET NO. 15-07 ("CFTC ORDER"). THE CFTC ORDER IMPOSED A MONETARY PENALTY OF $275 MILLION ON HSBC AND ORDERED HSBC TO CEASE AND DESIST FROM VIOLATING SECTIONS 6(C)(3) AND 9(A)(2) OF THE COMMODITIES EXCHANGE ACT, 7 U.S.C. §§ 9(3) AND 13(A)(2) (2012), AND 17 C.F.R. § 180.2 (2014). IN ADDITION TO REMEDIAL ACTIONS IT HAS ALREADY TAKEN, HSBC IS REQUIRED BY THE CFTC ORDER TO UNDERTAKE CERTAIN REMEDIAL ACTIONS OUTLINED THEREIN AND TO REPORT TO THE CFTC WITHIN 120 AND 365 DAYS OF THE CFTC ORDER ON THE STEPS IT HAS TAKEN TOWARDS UNDERTAKING SUCH REMEDIAL ACTION. Summary: ON NOVEMBER 11, 2014, THE CFTC REACHED A SETTLEMENT WITH HSBC BANK PLC ("HSBC") IN WHICH HSBC, WITHOUT ADMITTING OR DENYING THE FINDINGS OR CONCLUSIONS THEREIN, CONSENTED TO THE ENTRY OF AN ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTIONS 6(C)(4)(A) AND 6(D) OF THE COMMODITY EXCHANGE ACT, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS, CFTC DOCKET NO. 15-07 ("CFTC ORDER"). THE CFTC ORDER IMPOSED A MONETARY PENALTY OF $275 MILLION ON HSBC AND ORDERED HSBC TO CEASE AND DESIST FROM VIOLATING SECTIONS 6(C)(3) AND 9(A)(2) OF THE COMMODITIES EXCHANGE ACT, 7 U.S.C. §§ 9(3) AND 13(A)(2) (2012), AND 17 C.F.R. § 180.2 (2014). IN ADDITION TO REMEDIAL ACTIONS IT HAS ALREADY TAKEN, HSBC IS REQUIRED BY THE CFTC ORDER TO UNDERTAKE CERTAIN REMEDIAL ACTIONS OUTLINED THEREIN AND TO REPORT TO THE CFTC WITHIN 120 AND 365 DAYS OF THE CFTC ORDER ON THE STEPS IT HAS TAKEN TOWARDS UNDERTAKING SUCH REMEDIAL ACTION.

Allegations: ON JANUARY 29, 2018, THE U.S. COMMODITY FUTURES TRADING COMMISSION (CFTC) ANNOUNCED A SETTLEMENT WITH HSBC SECURITIES (USA) INC. (HSI) TO RESOLVE THE CFTC'S INVESTIGATION INTO HSBC'S PRECIOUS METALS OPERATIONS AND TRADING. THE CFTC'S INVESTIGATION CONCLUDED THAT BETWEEN JULY 2011 THROUGH AUGUST 2014, A TRADER IN HSBC'S NEW YORK OFFICE ENGAGED IN THE DISRUPTIVE TRADING PRACTICE OF SPOOFING (BIDDING OR OFFERING WITH THE INTENT TO CANCEL THE BID OR OFFER BEFORE EXECUTION) WITH RESPECT TO CERTAIN PRODUCTS IN GOLD AND OTHER PRECIOUS METALS TRADED IN COMEX. Status: Final Sanction Detail: PURSUANT TO THE ORDER, HSI AGREED TO PAY A $1.6 MILLION CIVIL MONETARY PENALTY AND AGREED TO CEASE AND DESIST FROM SPOOFING. HSI MADE THE PAYMENT ON FEBRUARY 12, 2018. Summary: ON JANUARY 29, 2018, THE U.S. COMMODITY FUTURES TRADING COMMISSION (CFTC) ANNOUNCED A SETTLEMENT WITH HSBC SECURITIES (USA) INC. (HSI) TO RESOLVE THE CFTC'S INVESTIGATION INTO HSBC'S PRECIOUS METALS OPERATIONS AND TRADING. THE CFTC'S INVESTIGATION CONCLUDED THAT BETWEEN JULY 2011 THROUGH AUGUST 2014, A TRADER IN HSBC'S NEW YORK OFFICE ENGAGED IN THE DISRUPTIVE TRADING PRACTICE OF SPOOFING (BIDDING OR OFFERING WITH THE INTENT TO CANCEL THE BID OR OFFER BEFORE EXECUTION) WITH RESPECT TO CERTAIN PRODUCTS IN GOLD AND OTHER PRECIOUS METALS TRADED IN COMEX. PURSUANT TO THE ORDER, HSI AGREED TO PAY A $1.6 MILLION CIVIL MONETARY PENALTY AND TO CEASE AND DESIST FROM SPOOFING. HSI MADE THE PAYMENT ON FEBRUARY 12,2018. HSI NEITHER ADMITTED NOR DENIED LIABILITY. THE CFTC'S ORDER NOTES THAT HSI AND ITS AFFILIATES CONDUCTED AN INTERNAL REVIEW INCLUDING ANALYZING THE TRADING ACTIVITY OF CERTAIN TRADERS FOR POTENTIAL SPOOFING MISCONDUCT AND SUBSTANTIALLY ASSISTED THE DIVISION'S INVESTIGATION, INCLUDING IDENTIFYING THE TRADER'S MISCONDUCT AND PROMPTLY REPORTING IT TO THE DIVISION. IN ADDITION, THE TRADER'S EMPLOYMENT WAS TERMINATED ONCE THE CONDUCT WAS IDENTIFIED. FURTHER, HSI HAS INITIATED AN OVERHAUL OF ITS SYSTEMS AND CONTROLS AND IMPLEMENTED A VARIETY OF ENHANCEMENTS TO DETECT AND DETER SIMILAR CONDUCT.

Allegations: THE SEC ALLEGED THAT BETWEEN NOVEMBER 2015 AND AUGUST 2017, HSBC SECURITIES (USA) INC. ("HSI") MADE FALSE AND MISLEADING STATEMENTS TO CURRENT AND PROSPECTIVE ADVISORY CLIENTS AND FAILED TO DISCLOSE CONFLICTS OF INTEREST CONCERNING THE FACTORS HSI USED TO DETERMINE COMPENSATION FOR ITS INVESTMENT ADVISER REPRESENTATIVES ("IARS"). THE SEC ALLEGED THAT, CONTRARY TO STATEMENTS IN ITS FORM ADV BROCHURES, HSI CONSIDERED SEVERAL FINANCIAL FACTORS RELATED TO CLIENT ACCOUNTS TO DETERMINE ITS IARS' COMPENSATION, INCLUDING THE AMOUNT OF ADVISORY FEES CLIENTS PAID TO HSI. THE SEC ALSO ALLEGED THAT, HSI FAILED TO ADOPT AND IMPLEMENT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS OF THE ADVISERS ACT AND THE RULES THERE UNDER IN CONNECTION WITH ITS REPRESENTATIONS ON IAR COMPENSATION. Status: Final Sanction Detail: AS PART OF THE SETTLEMENT, THE SEC ORDERED THAT HSI (I) CEASE AND DESIST FROM VIOLATING SECTIONS 206(2) AND 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THERE UNDER (II) BE CENSURED; AND (III) PAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $725,000. THE CIVIL MONETARY PENALTY WAS PAID ON MARCH 23, 2020. Summary: ON MARCH 16, 2020, HSI ENTERED INTO A SETTLEMENT WITH THE SEC CONCERNING HSI'S DISCLOSURES TO ADVISORY CLIENTS AND PROSPECTIVE CLIENTS FROM NOVEMBER 2015 THROUGH AUGUST 2017 REGARDING HOW IT COMPENSATES ITS DUALLY REGISTERED INVESTMENT ADVISER AND BROKER REPRESENTATIVES ("IARS"). THE SEC DETERMINED THAT HSI'S DISCLOSURES WERE FALSE AND MISLEADING BECAUSE THEY FAILED TO DISCLOSE CONFLICTS OF INTEREST ABOUT HOW IARS' COMPENSATION WAS DETERMINED. THE SEC'S ORDER RECOGNIZES THAT HSI DISCLOSED TO ALL BROKERAGE CUSTOMERS IN ITS CUSTOMER AGREEMENT THAT CONFLICTS OF INTEREST BETWEEN CUSTOMERS AND IARS MAY ARISE WITH RESPECT TO RECURRING INCOME HSI RECEIVES. BUT IN SEPARATE DISCLOSURES TO ADVISORY CUSTOMERS, HSI STATED THAT IARS WERE COMPENSATED BASED SOLELY ON NON-FINANCIAL FACTORS, AND NOT ON THE FEES PAID TO HSI. THE SEC FOUND THAT HSI DID CONSIDER FINANCIAL FACTORS IN SETTING IAR'S DISCRETIONARY BONUSES, INCLUDING THE AMOUNT OF QUARTERLY ADVISORY FEES SPECTRUM AND MANAGED PORTFOLIO ACCOUNT ("MPA") PROGRAM CLIENTS PAID TO HSI, WHICH GAVE IARS AN INCENTIVE TO GENERATE THOSE FEES. THE SEC FURTHER DETERMINED THAT HSI LACKED SUFFICIENT POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS PERTAINING TO ITS REPRESENTATIONS ABOUT IARS' COMPENSATION. ON MARCH 16, 2020, WITHOUT ADMITTING OR DENYING THE SEC'S FINDINGS, HSI AGREED TO CEASE AND DESIST VIOLATING THE STATUTES AND RULES THE SEC DETERMINED IT VIOLATED, A CENSURE AND TO PAY A FINE OF $725,000. THE CIVIL MONETARY PENALTY WAS PAID ON MARCH 23, 2020.

Allegations: ON NOVEMBER 25, 2014, HSBC PRIVATE BANK (SUISSE), SA ("PBRS") ENTERED INTO A SETTLEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") RESULTING IN THE SEC ISSUING AN ORDER. PBRS CONSENTED TO THE ENTRY OF THE ORDER THAT FINDS THAT PBRS WILLFULLY VIOLATED SECTIONS 15(A) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTION 203(A) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT") IN CONNECTION WITH PBRS, THROUGH ACTIONS OF CERTAIN RELATIONSHIP MANAGERS, PROVIDING CROSS-BORDER BROKERAGE AND INVESTMENT ADVISORY SERVICES TO U.S. CLIENTS WITHOUT REGISTERING WITH THE SEC AS A BROKER-DEALER AND INVESTMENT ADVISER FROM AT LEAST 2003 UNTIL 2011. ("ORDER"). Status: Final Sanction Detail: THE ORDER REQUIRES PBRS TO CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF EXCHANGE ACT SECTION 15(A) OR ADVISERS ACT SECTION 203(A); CENSURES PBRS, AND REQUIRES PBRS TO PAY DISGORGEMENT OF $5,723,193, PREJUDGMENT INTEREST OF $4,215,543, AND A CIVIL MONETARY PENALTY OF $2,600,000, WHICH PBRS PAID ON DECEMBER 18, 2014. Summary: SOLELY FOR THE PURPOSE OF SETTLING THESE PROCEEDINGS, PBRS CONSENTED TO THE ORDER ADMITTING THE FACTS SET FORTH IN THE ORDER, ACKNOWLEDGING THAT ITS CONDUCT VIOLATED THE FEDERAL SECURITIES LAWS, AND ADMITTING THE SEC'S JURISDICTION OVER IT AND THE SUBJECT MATTER. THE ALLEGATIONS, DISPOSITIONS, FINDINGS AND SANCTIONS OF THE ORDER ARE DESCRIBED ABOVE IN ITEMS 7 AND 12.