Hong Kong's securities regulator banned UBS from leading initial public off...
HONG KONG - Hong Kong’s securities regulator banned UBS from leading initial public offerings in the city for a year, while fining it and rivals including Morgan Stanley a combined $100 million for due diligence failures on a series of IPOs.
The Securities and Futures Commission on Thursday fined Swiss giant UBS HK$375 million . It fined Morgan Stanley HK$224 million, Merrill Lynch HK$128 million and Standard Chartered HK$59.7, all for failures when sponsoring, or leading, IPOs. Hong Kong IPOs need at least one sponsoring bank, which typically takes the lead in running the IPO and collects a larger proportion of fees than banks listed only as bookrunners.
UBS was also fined for failing to discharge its duties in a third IPO which the regulator did not name, but which sources have identified as China Metal Recycling , a now-defunct scrap merchant. Tianhe, engaged in the manufacture and sale of chemical products, listed in 2014 but was soon after targeted by a short seller, who claimed it had inflated profits and presented related groups as customers. The company denied the allegations.Among the failings described by the regulator was one instance where none of the three banks sponsoring Tianhe Chemical’s IPO followed up after interviewing the company’s largest customer as part of their sponsor due diligence.
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