HK reg­u­la­tor steps up ef­forts against IPO mis­con­duct

China Daily (USA) - - BUSINESS - By BLOOMBERG

Hong Kong, the world’s sec­ond-largest mar­ket for newlist­ings this year, is plan­ning to step up its ef­forts to po­lice mis­con­duct by spon­sors of ini­tial pub­lic of­fer­ings.

The Se­cu­ri­ties and Fu­tures Com­mis­sion will bring more cases against IPO spon­sors, or fi­nan­cial in­sti­tu­tions that sign off on list­ings, Thomas Atkinson, the reg­u­la­tor’s ex­ec­u­tive di­rec­tor of en­force­ment, said on Wed­nes­day at a con­fer­ence in the city.

The SFC is boost­ing its su­per­vi­sion of new list­ings amid a spike in com­plaints against pub­licly traded com­pa­nies in re­cent years. In­ex­pli­ca­bly high val­u­a­tions, ex­ces­sive share­hold­ing con­cen­tra­tions and trad­ing vol­umes that col­lapsed af­ter some IPOs were among problems high­lighted by the SFC’s Chief Ex­ec­u­tive Of­fi­cer Ash­ley Alder ear­lier this week.

“To put it very lightly, the con­duct and level of pro­fes­sion­al­ism demon­strated by some spon­sors has left a lot to be de­sired,” Atkinson said at the Thom­son Reuters PanAsian Reg­u­la­tory Sum­mit. “You can ex­pect to see some more of th­ese cases,” he said, adding that “hope­fully, we’ll hold th­ese firms and the se­nior man­age­ment ac­count­able.”

The com­mis­sion on Nov 1 alerted Stan­dard Char­tered Plc that it in­tends to take ac­tion against a unit of the UK bank in re­la­tion to its role as a joint spon­sor of an IPO in the city in 2009. Last month, UBS Group AG said it could be fined and sus­pended from ar­rang­ing first­time share sales in Hong Kong.

The se­cu­ri­ties watch­dog in­tro­duced a new sys­tem in Oc­to­ber 2013 where spon­sors of an IPO will be held ac­count­able if the of­fer doc­u­ments con­tain un­true state­ments. It has also warned that bankers on such deals can be held crim­i­nally li­able. In 2012, the SFC said a stricter regime, with un­am­bigu­ous crim­i­nal and civil li­a­bil­ity, is needed to pro­tect in­vestors af­ter a string of ac­count­ing scan­dals in­volv­ing pub­licly traded Chi­nese com­pa­nies.

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