HSBC Finance
Statement of Business Principles and Code of Ethics
The Fundamental Principle
In all its endeavors, it is the policy of HSBC North America Holdings Inc. and each of its subsidiaries (collectively referred to herein as the "Corporation") to act honestly and fairly at all times. It is the Corporation's policy to comply with the spirit as well as the letter of all applicable laws and regulations in all that it does. Each employee of the Corporation is expected to do the same.
Violations of this policy and failures to report known violations will subject the employee to disciplinary procedures, including termination of employment. In addition, employees who should have, through the exercise of due diligence, discovered violations of this policy, but who fail to do so, may be subject to discipline, including termination of employment.
In dealing with employees, customers and suppliers, the Corporation makes decisions without regard to race, ancestry, color, religion, national origin, citizenship, marital status, veteran's status, gender, gender identity, sexual orientation, age or disability that can be reasonably accommodated. All employees are responsible for ensuring that the working environment is free of any form of harassment, discrimination or inappropriate behavior.
With regard to employees, the Corporation is committed to diversity and equal opportunity. Supervisory personnel are reminded to hire, assess and reward employees strictly on the merit of qualifications and job performance. Because the Corporation respects each employee's private life, social conscience and personal beliefs, supervisory personnel may not require employees to perform personal tasks nor attempt to coerce employees into supporting any particular public issue, social cause or political candidate. An employee's decision whether to support such issues, causes or candidates is entirely voluntary and will have no effect on his or her employment relationship with the Corporation.
In dealing with customers, the Corporation is dedicated to offering top quality products and services and to supplying only honest information about them. The Corporation will offer products and services on a competitive basis and will not tolerate the use or attempted use of improper incentives to obtain business. With regard to suppliers, the selection of products and services by employees with purchasing duties for the Corporation is based solely on quality, price and service.
Compliance with Laws and Regulations
Numerous laws and regulations, both domestic and foreign, specifically govern various aspects of the Corporation's business: the Foreign Corrupt Practices Act, the Financial Institutions Regulatory and Interest Rate Control Act (FIRA), the Community Reinvestment Act, the Truth-in-Lending Act, the Fair Credit Reporting Act, the Bank Secrecy Act, and various federal and state usury laws, to name just a few. In addition, laws and regulations of general applicability, such as the securities, equal employment, wage and hour and antitrust laws, affect us. Failure to comply with these laws and regulations can have serious consequences, including legal liability for damages and other penalties. You have a responsibility to learn and understand the laws and regulations applicable to the activities of your department and your particular responsibilities within your department. If you identify unresolved legal questions you should bring them promptly to the attention of your supervisor or department head. The General Counsel's office is always available to provide further help.
The banking industry has concerns that money laundering schemes will increase and if successful will lead to the erosion of public confidence in the banking system. Bank personnel therefore must comply aggressively with the provisions of the Bank Secrecy Act -- particularly the reporting of unusual transactions. Compliance will not only help the Corporation avoid stringent penalties, but also will assist us in fulfilling our obligations to our fellow workers, our parent company and our communities.
Corporate Sustainability
Our goal is to be one of the world's leading brands in corporate sustainability. This is not solely an environmental or social agenda, nor is it confined to governance and ethics. Sustainability is about bringing all of these issues together into our business model, and about maintaining the long-term growth of a successful business for the benefit of our stakeholders. For HSBC, sustainability is about making decisions that maintain the right balance between the environment, society and the economy to ensure long-term business success.
We believe that it is our duty to our customers, investors and employees to foster an ethical, responsible and sustainable corporate philosophy.
While our biggest contribution to society is the responsible provision of financial services, we have also long sought to strengthen our ties with local communities through philanthropic partnerships. Education continues to be the primary focus for our corporate giving. The second philanthropic area we support is the environment.
Conflict of Interest
As part of your employment responsibilities we expect you to act in a way that contributes to the financial success of the Corporation, enhances its reputation and fosters our customer relationships. This requires you to look after your own private financial interests in such a way that you do not profit improperly from your position with the Corporation.
A "conflict of interest" arises when your personal interest in a transaction, or an obligation you owe to someone else, comes into conflict with your obligation to the Corporation and its customers. This includes using your position to advance your own personal gain or advantage on the basis of sensitive information gained during your employment, whether or not you obtained this gain or advantage at our expense or at the expense of any entity of the Corporation or its customers.
Conflict of interest rules apply to all transactions, directly or indirectly, for your own account or for the account of family members or any person who shares the same residence.
General Policy:
While staff members have personal lives and private interests outside their work, as an employee of a financial institution you must manage your personal financial and business affairs to avoid conflicts of interest, or even the appearance of any conflict of interest.
When a conflict of interest does confront you in the performance of your job, you must disclose its existence promptly to your immediate supervisor or divisional compliance officer, fully describing the facts giving rise to the conflict, and excuse yourself from participation of any aspect of decision made with respect to the transaction.
While it is impossible to set out all the situations where conflicts may arise, the following examples outline situations that are either impermissible, or are permitted only with prior disclosure or approval.
Please direct questions concerning the existence of a possible conflict of interest to the General Counsel's Office.
Self Dealing, Fiduciary Appointments and Powers of Attorney:
You may never participate in the consideration or approval of any extension of credit, any waiver of fees or of any other transaction between the Corporation and yourself or anyone in your immediate family, or with other people, corporations, partnerships, trusts or other organizations in which you or any member of your immediate family have a significant financial interest.
You may not accept a personal fiduciary appointment for anyone who is a customer or vendor of the Corporation (for example, as an executor or trustee), whether alone or with any other person, bank or other institution, except in close family relationships or unless you have the prior written approval of the General Counsel's office. You may not accept such an appointment, even in a close family relationship, where an actual or potential conflict with your obligations to the Corporation would arise.
Also, you may never accept Power of Attorney for anyone who is a customer or vendor of the Corporation, except in close family relationships, without prior written approval of the General Counsel's Office.
Entering into relationships for ordinary banking, trust or investment services with the Corporation on standard terms and conditions (such as a safe deposit box, a regular checking or savings account, a certificate of deposit or a discount brokerage, trust or investment relationship on the same terms and conditions available to other customers or generally available to employees) does not violate the foregoing prohibition.
We ask you to direct questions concerning such situations to the General Counsel's Office.
Gifts from Suppliers or Customers:
The Bank Bribery Act and other applicable laws prohibit you from seeking or accepting for yourself or any other person anything of value (including services, discounts or entertainment) from customers, suppliers or anyone else in return for any business, service or confidential information of the Corporation. The laws expressly prohibit you from accepting cash, checks or gift certificates convertible to cash. There are certain exceptions to the general prohibition against seeking or accepting anything of value as follows:
(i) Lunches, dinners and other customary entertainment (e.g., sports events, golf, etc.) provided in the ordinary course of a supplier's or customer's business and in situations where we would normally reimburse the cost as a proper business expense;
(ii) Services or discounts customarily afforded by suppliers or customers in the ordinary course of their business;
(iii) Promotional gifts such as lighters, pencils, calendars and the like, routinely distributed by the donor; and
(iv) Gifts in connection with customarily recognized events (e.g., holidays, job promotions, etc.) not exceeding a $100 value.
You must promptly report to the General Counsel's office anything of value beyond those items listed above if offered to you, received by you, or if you anticipate receiving such an item.
NOTE: Employees may never accept gifts of cash, checks or gift certificates convertible to cash, regardless of amount.
Borrowing Money from Suppliers or Customers:
Employees are not permitted to borrow from any of the Corporation's suppliers or customers.
You may receive credit on customary terms in connection with the purchase of goods and services from a commercial establishment within the foregoing prohibition. We allow loans made to staff members by other financial institutions, including bank correspondents of the Corporation, in the ordinary course of their business
Note: Because the Corporation is engaged in the business of lending, the Corporation's employees must set an example. Failure to timely repay loans from the Corporation may place the employee in a conflict of interest situation. Therefore, the Corporation believes it appropriate to disclose an employee's delinquent debt to the employee's business unit manager.
Outside Employment and Business Activities:
Other potential sources of conflict of interest include holding any outside employment position or conducting personal business which may interfere with the employee devoting full attention and loyalty to the Corporation during working hours; holding a direct or indirect financial interest in a competitor company or in any firm or entity with which the Corporation does business (excepting normal investments in publicly owned companies); holding a direct or indirect financial interest in any firm or entity that is a supplier of or vendor for the Corporation (excepting normal investments in publicly owned companies); holding or acquiring an interest in any property or business in which the Corporation has or proposes to acquire an interest; serving as a director or officer of any firm that is a competitor, customer or supplier of the Corporation; or conducting business on behalf of the Corporation with an individual related by blood, marriage or adoption. Accordingly, you should disclose and obtain approval for any outside employment from your manager or Human Resources.
You may accept a position as a director, officer, partner or consultant of any business organized for profit only if you receive the written consent of both your Executive Vice President or Business Unit head, and the General Counsel's Office.
You should know that certain types of outside employment, such as with other financial institutions or securities dealers, are prohibited by law. Refer questions relating to the appropriateness of such outside employment to the General Counsel's Office.
Soliciting or Accepting Legacies or Other Favors:
We do not allow you to solicit any legacy or other favor granted by an individual or organization where your relationship to the individual or organization arose primarily during the course of your employment.
Confidential Information
Information About Our Customers and Employees:
We expect you to treat information entrusted to us by our customers and employees as you perform your duties for the Corporation as confidential and privileged. This includes information relating to deposit and loan balances, information concerning the management, financial condition and future plans of our customers' businesses, employee/salary information and information obtained in the course of fiduciary relationships. You must not disclose confidential information to anyone either inside or outside the Corporation except in compliance with the Corporation's information protection policies. Your obligation to maintain the confidentiality of the information continues even after you leave the Corporation.
We consider personnel folders and other information concerning our employees as strictly confidential, not disclosable to outsiders by fellow employees or supervisors, and the property of the Corporation. You may inspect your own personnel records but may not copy or remove any documents in your file. Requests for any such information should be referred to Human Resources.
Use of the Corporation's Computer Systems:
Use of the Corporation's computer systems provides employees access to confidential customer information based on the business/support function(s) being performed.
Employees are granted access to the Corporation's various computer systems to perform their job duties. Each employee is expected to protect the access granted to him or her and to keep any associated passwords confidential at all times. Usage will be monitored to ensure compliance with the Corporation's Information Technology Policies.
Limited Use of Confidential Information:
While recognizing the need for a constant flow of information for the smooth operation of the Corporation, we expect you will not disclose confidential information pertaining to our customers' affairs to your fellow employees unless they have a clear business need to know the information for the performance of their duties. You must exercise particular care in communicating confidential information to persons in other departments or in other corporate subsidiaries and affiliates who may have different responsibilities and possibly conflicting obligations. Without prior approval of the General Counsel's Office, you cannot communicate nonpublic information concerning our customers to staff members in the trust or investment departments of HSBC, HSBC Asset Management Americas, Inc., or any other HSBC subsidiary or affiliate engaged in investment advisory or management activities. Employees in these departments and affiliates should not request such information.
Disclosure of Information to Outsiders:
Apart from routine credit inquiries, you cannot release information concerning our customers' affairs to outsiders, including law enforcement authorities, except in response to a valid subpoena or similar legal process within strict compliance of the Corporation's established internal operating procedures. Treat information concerning the Corporation, its affiliates, or any of their customers as confidential. You may not disclose this information to anyone outside of the Corporation, except as otherwise provided in the Corporation's information protection policies, without the written authorization of our General Counsel. Your obligation to maintain customer information as confidential remains in effect even after you are no longer employed by the Corporation.
Information About HSBC North America Holdings Inc., its Subsidiaries or Affiliates:
Because of your position, you may obtain information about your business unit or HSBC North America Holdings Inc. or other HSBC subsidiaries or affiliates not otherwise available to the public. You cannot disclose confidential financial or other proprietary information concerning any of these entities to outsiders until it has been published in reports to security holders or otherwise made generally available to the public. HSBC policy requires the coordinated communication of sensitive information about HSBC or its affiliates to investors, security analysts and the press through properly designated representatives in our Investor Relations and Public Affairs areas. Your obligation to maintain information about HSBC and its affiliates as confidential remains in effect even after you are no longer employed by the Corporation.
External Communications:
You must refer all media inquiries directly without further comment to Public Affairs. Likewise, Public Affairs must coordinate all ongoing media contact. This ensures the preparation of official statements is consistent with corporate policy, monitored contacts and anticipated news coverage.
In addition, your immediate supervisor and Public Affairs must approve any articles, speeches or other materials that you may wish to submit to the media for publication, and must approve in advance any external speeches or appearances you make as an employee of the Corporation.
Personal Gain:
You must not use confidential information about the Corporation or any of its affiliates, customers, or suppliers entrusted to you in the course of your employment for your personal gain or the personal gain of your family, friends, or others.
Securities Law Penalties:
The improper or personal use of confidential information concerning the Corporation or its affiliates, customers or suppliers is a violation of the Corporation's policies, and may subject both you and the Corporation to penalties under various securities laws and regulations.
The federal securities laws prohibit you from taking advantage of nonpublic material information about the Corporation or its affiliates, customers or suppliers, or communicating such information to others. If you violate these laws, you may be subject to penalties, including fines and imprisonment. Information about a company that may affect the market price or a person's decision to invest in its stock is considered "Material Information." Only a small group within the Corporation generally knows this type of information and may divulge it only in a manner that assures equal access to the entire investing public.
Competition
The Corporation believes in the free enterprise system and is dedicated to the maintenance of fair competition in an open market. Employees are to avoid any circumstances that will, or would appear to, violate antitrust or competition laws.
Employees shall refrain from discussing or entering into any arrangements or understandings with competitors concerning prices, production limits, allocation of customers, products or territories, boycotting certain customers or suppliers or in any way engaging in other anti-competitive practices. Normal business activities occasionally require contacts with competitors, but on such occasions discussion of any of the above-mentioned subjects must be avoided. Any violation of these conditions should be reported immediately to the General Counsel's office.
Whenever any doubt exists as to the legality of a particular action, advice from the General Counsel's office should be sought before engaging in this activity. In this same spirit, employees should refrain from making disparaging comments about the products or services of the Corporation's competitors.
Employees are prohibited from making, offering or soliciting any payment that is in the nature of a bribe, kickback or other illegal payment to any customer or supplier of the Corporation or to any other person. If any customer, supplier or any other person solicits or requests such a payment, that solicitation or request should be reported immediately to the General Counsel's office.
Corporation Records
The Corporation's books and records and other essential data are to be maintained with accuracy and honesty in strict compliance with applicable laws, accounting principles and management's general authorization. When preparing such records, employees are not to make false or misleading entries in records nor permit to exist any fund or asset or liability which is not fully and properly recorded on the Corporation's books. No transactions, agreements, programs, plans, obligations or payments shall be entered into, made or recorded with the understanding that their use for other than the stated purpose.
Employees shall not make any false or misleading statements about such records or conceal information from management or the Corporation's auditors. We expect you to fully cooperate with our internal and independent auditors and counsel. This means providing them with complete and accurate information. Any omissions or inaccuracies in the Corporation's records should be reported immediately to the General Counsel's office.
Government and Public Affairs
The Corporation advocates the democratic system and is committed to upholding the political, legal and governmental processes of the local, state and federal systems of the United States and other countries where the Corporation operates.
Further the Corporation recognizes that participation by citizens in civic and political activities is necessary for this system to function properly. The Corporation encourages employees to exercise their right to vote, to participate actively in the political process, to be informed on public issues and on the positions and qualifications of public officials and candidates for public office and to support issues, candidates and parties of their choice, as individual citizens.
Employees should not use the Corporation's name or the name of HSBC Holdings plc or any of their affiliated entities, either directly or indirectly, to endorse any public issue, political candidate, political party or business interest, product or service, unless otherwise authorized by the General Counsel's office.
Political Activities and Contributions:
Federal and state laws and regulations restrict, and in some cases prohibit, corporations from making payments or using their property to support candidates for political office or political parties or committees. As a matter of policy, HSBC and its subsidiaries do not use corporate funds to make contributions to federal, state or local candidates or committees. We prohibit the use of the Corporation's employees or property, including office supplies, printing facilities, postage and equipment, to promote political candidates or parties. We prohibit you from making any expenditures for such purposes through travel and expense accounts and we do not allow recovery of any such expenditure.
Both state and federal laws, however, permit voluntary personal contributions to segregated funds established for political purposes, such as H-PAC, the political action committee (PAC) for employees of the Corporation. The Corporation may legally pay for the PAC's administrative expenses, but the employees voluntarily provide the funds the PAC uses to financially support candidate campaigns.
The solicitation of the Corporation's employees for political contributions on the Corporation's premises is limited to H-PAC.
Holding of Public Office:
Under the laws of the State of New York and most other states in which the Corporation does business, the holding of public office, elective or otherwise, may give rise to an illegal conflict of interest or could prevent us from having normal business relationships with the governmental body involved, including depository relationships and the purchase of its debt obligations. Whether or not the public official receives any salary or participates in the actual deliberations leading up to any contract or transaction does not affect this rule.
To avoid such violations and possible criticism and embarrassment, any officer or employee must obtain approval from the General Counsel's Office before seeking a public office or accepting an appointment to one. We generally grant such approval if the position does not prevent the Corporation from doing business with the public body.
A public office means any position in the state, county, city, town, village or federal governments and includes school districts, public authorities, renewal agencies and other comparable governmental subdivisions or agencies.
Improper Payments:
The Corporation prohibits the use of corporate funds for bribes or for making improper payments of any kind to any persons or organizations in order to obtain their business or to influence their policies or decisions, or for any other reason. This prohibition includes any payment to any foreign or domestic government official, employee or agent not required by law. We also prohibit the making of any "kickback" or the sharing of fees with those who represent customers or suppliers of the Corporation.
We remind you that the Corporation and its affiliated companies conduct business throughout the world and that the Corporation will strictly comply with the applicable laws and regulations of the countries in which we do business. However, you must remember that laws and business customs vary from one foreign country to another and from the laws and customs of the United States. We forbid foreign practices that violate a U.S. law or regulation even when acceptable locally.
If you have questions concerning the legality of any payment, or any suspicion of a kickback, bribe or other illegal arrangement, you should report it immediately to the General Counsel's office.
Personal Investments
Subject to any more restrictive divisional policies and procedures, you and the members of your immediate family may invest at your discretion in stocks, bonds and other corporate securities, as well as foreign currency, interest rate and commodity forwards, futures and options. However, because of your position with a financial institution, you should avoid excessive speculation or risk in your personal financial activities. You may easily measure excessive risk by determining if the loss of a particular investment would significantly affect your standard of living or cause you to encounter extreme financial hardship.
You also must avoid particular investments affecting your judgment with respect to making decisions for the Corporation or giving rise to the appearance of a conflict of interest if reported on the front page of The New York Times.
You must limit investments in the obligations of customers, suppliers and other parties doing business with the Corporation to securities publicly traded on a national securities exchange or in the over-the-counter market, unless you obtain the prior written approval of the General Counsel's office. Investments in such publicly traded securities in excess of 1% of the company's issued and outstanding shares require prior approval of the General Counsel's Office.
In making your personal investment decisions, you must carefully avoid the use of any confidential information you have obtained through your employment. In order to avoid potential conflicts in this area, you should avoid investments in the securities of any corporate customer for which you currently have or anticipate having direct or indirect account responsibilities.
Trading and Margin Accounts:
Subject to compliance with divisional policies and procedures applied because of your position with the Corporation, officers and employees may maintain accounts, including margin accounts, for their own personal trading and investment activities and those of members of their families and others. You are permitted to maintain these accounts with HSBC affiliates, such as HSBC Securities (USA) Inc., or with independent securities, foreign exchange or commodities firms.
The Rules of Fair Practice of the Financial Industry Regulatory Authority (FINRA) restrict registered broker dealers, including HSBC Securities (USA) Inc., from selling securities distributed in a public offering (i) to senior officers of commercial banks, investment companies and registered investment advisers, or (ii) to any employees of such entities engaged in buying or selling securities for such entities or their customers. These restrictions also apply to family members sharing the same household.
In addition, rules of the New York Stock Exchange provide that member firms may not open a securities or commodities account for bank employees without first obtaining the employer's written consent. Your supervisor or divisional compliance officer can provide such a consent, if requested to do so. Of course, officers and employees should not engage in trading or investment activities conflicting with their employment duties or considered imprudent under their own personal circumstances.
Reporting and Inquiries
The basic principles presented in this statement are intended as general guidelines rather than rules and regulations for all situations. Should any question arise as to the interpretation of a particular principle or situation, the employee shall refer the question to the General Counsel's office.
Inquiries and information reported under this policy will be kept in confidence except as may otherwise be required to protect the Corporation's interests. There shall be no reprisals for reporting information pursuant to this policy.
Violations of this policy and failures to report known violations will subject the employee to disciplinary procedures, including termination of employment. In addition, employees who should have, through the exercise of due diligence, discovered violations of this policy, but who failed to do so, may be subject to discipline, including termination of employment.
Reporting Violations:
If asked or ordered to participate in, or you otherwise become aware of, any event violating the Corporation's policies, applicable laws and government regulations, or both, you should report the information to the General Counsel's office and/or contact the Employee Integrity Tip Line at 888-560-1777. The Employee Integrity Tip Line Unit will notify Corporate Security, if appropriate. Corporate Security conducts such investigations as are required under the circumstances and has responsibility for coordinating the related involvement of the Corporate Security Department, Human Resources Division and related division management.
Inquiries:
You should refer questions concerning this Statement of Business Principles and Code of Ethics to the Employee Integrity Tip Line (888-560-1777) or the General Counsel's office.
Last Revised: July 23, 2008
