The Securities & Futures Commission has reprimanded Standard Chartered Bank (Hong Kong) for failing to ensure its clients who invested in the mutual funds from two fund houses were treated fairly.

Investigations into the bank's mutual funds distribution and dealing operation between May 2001 and September 2003 found the bank gave preferential treatment to one client, Stone Castle Ltd, over other clients.

The bank allowed Stone Castle to get same-day pricing for switching in and out of the relevant mutual funds. The same-day pricing arrangement was not made known nor available to other clients who received next-day pricing.

The commission said the timing advantage given to Stone Castle was open to abuse and was potentially prejudicial to the bank's other clients because it could enable Stone Castle to trade ahead of those clients at better prices.

The bank has agreed to make payments to the eligible clients who invested in the relevant funds and did not receive the same treatment given to Stone Castle. However, it does not accept that it has done anything wrong.