HONG KONG (Reuters) - Hong Kong’s securities regulator has fined and reprimanded a subsidiary of Bank of Communications (Bocom)(601328.SS) for failing to “discharge its duties” as a sole sponsor of a listing application of a mainland Chinese company in the city, it said on Wednesday.
Bocom International (Asia) Limited (BIAL), a Hong Kong investment banking unit of Bocom, was fined HK$15 million ($1.93 million) for due diligence failures related to China Huinong Capital Group Limited, the Securities and Futures Commission (SFC) said in an e-mailed statement.
Breaches of Hong Kong’s code of conduct included failure to carry out sufficient checks to verify information provided before submission of the listing application on China Huinong’s behalf in late 2014. The city’s bourse has yet to approve the IPO.
The SFC said that BIAL should have done more to provide detail on lending by China Huinong that had not been secured by collateral but had been guaranteed by companies or individuals.
The regulator added that BIAL had cooperated with it in accepting the disciplinary action. “There is no evidence to suggest a systemic failure in BIAL’s policies, procedures and practices relating to its sponsorship work,” the SFC said.
BIAL and Bocom, one of China’s largest banks, did not respond immediately to requests for comment.
Wednesday’s action comes against the backdrop of the regulator’s increased efforts to scrutinize the sponsorship of stock listings in the territory, which has been the world’s biggest IPO market since 2015.
Standard Chartered and UBS separately disclosed late last year that the SFC was investigating their role as sponsors of unnamed IPOs and that the regulator’s actions could result in financial consequences.
China Forestry raised $216 million in the 2009 IPO, but its shares have been suspended since January 2011 and the company is now in liquidation and in the process of being delisted after its auditor said it had found possible accounting irregularities.
Reporting by Julie Zhu; Editing by David Goodman