UBS, StanChart to settle HK IPO misconduct case
HONG KONG: UBS Group AG and Standard Chartered Plc (StanChart) have agreed to settle a case of alleged misconduct related to a 2009 initial public offering (IPO), here, in a move expected to end uncertainty about the Swiss bank’s ability to lead stock listings in the city.
While StanChart closed its equity business in 2015, UBS was expected to appeal an unprecedented 18-month ban on sponsoring IPOs in the Asian financial hub, which was imposed, sources say, because of its role in the listing of a firm that subsequently collapsed.
StanChart and UBS banker Cen Tian were scheduled to appeal against disciplinary action by the Securities and Futures Commission (SFC) over alleged misconduct during the listing of a now defunct Chinese timber company, which the two banks led.
But the banks reached a settlement ahead of the appeals, a counsel for SFC, Jat Sew-Tong, told a three-member Securities and Futures Appeals Tribunal yesterday.
He said details of the settlement would be released at a later date.
The high-profile case, one of many being investigated by the SFC, is seen as a test of mounting scrutiny of IPO practices in a city where helping firms list is big business for banks.
A ban on leading IPOs, if implemented, would begin once the appeals process has been exhausted, but the uncertainty around whether or when it might come into effect has already hurt UBS’ ability to pitch for sponsor work, here.
Last year, UBS, which was also fighting a HK$119 million (RM61.2 million) fine from the 2009 IPO case, sponsored just one IPO, according to Dealogic, though it advised on ten in total.
While UBS has not identified the IPO in question and the SFC has not confirmed it, people with knowledge of the matter have said it was that of China Forestry.
The timber merchant raised US$216 million (RM881.28 million) in its IPO, but 14 months after listing, trading of its shares was suspended when its auditor, KPMG, discovered irregularities.
The company was subsequently liquidated.