Household HSBC Watch

Wednesday, August 31 — Amid speculation that HSBC Securities might make a buyout offer for Charles Schwab, HSBC Securities Canada Inc., the brokerage arm of Canada’s largest foreign-owned bank, settled a market-timing activity case for $1.16-million, the Investment Dealers Association of Canada said Wednesday. The fact that a settlement had been reached in the matter had been announced Aug. 19.

Market timing — or quick in-and-out trading of fund units to exploit price discrepancies — is not illegal, but can hurt long-term investors that mutual funds say they serve by diluting a fund’s assets, raising its costs and potentially forcing the manager to keep extra cash on hand. HSBC Securities acknowledged that from Jan. 1, 2002 to July 1, 2002, it engaged in potentially harmful practices by executing market timing trades for one client, the IDA said in a release.