July 9, 2018 / 10:23 AM / 2 years ago

HK regulator fines China Construction Bank unit $3 mln for IPO sponsor failings

HONG KONG, July 9 (Reuters) - Hong Kong’s securities regulator has fined China Construction Bank International Capital (CCBIC) HK$24 million ($3.06 million) for failings related to its role as sponsor when it tried to bring seafood company Fujian Dongya Aquatics to market in 2014.

The disciplinary action is the third in what is expected to be a series of measures by the Securities and Futures Commission (SFC) against banks for misconduct when sponsoring IPOs in the Asian financial hub.

CCBIC, a unit of state-owned China Construction Bank , has also agreed to an independent review of its policies and procedures in relation to its sponsor work, the SFC said in a statement on Monday.

It said the bank had failed to conduct reasonable due diligence on Fujian Dongya before submitting the listing application, and had not kept a proper audit trail or written record of its due diligence work.

Fujian Dongya applied to list on the main board of the Hong Kong stock exchange on March 21, 2014 with CCBIC as its sole sponsor. The company’s listing application lapsed on 22 September 2014.

Neither CCBIC nor Fujian Dongya Aquatics could be immediately reached for comment.

The SFC said in its annual report released in June that it had issued 13 notices of proposed disciplinary actions against eight firms and four sponsor principals relating to IPO work, - a key business for investment banks in the city.

In May, the SFC fined Citigroup’s Asian business HK$57 million for failings related to its discharge of duties as sponsor of the 2009 initial public offering (IPO) of Real Gold Mining Ltd

In March, UBS said in its annual report the SFC planned to block it from sponsoring initial public offerings for 18 months, adding it was appealing the decision. ($1 = 7.8481 Hong Kong dollars) (Reporting by Alun John and Julie Zhu; Editing by Muralikumar Anantharaman)

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