UBS, Morgan Stanley, Merrill Lynch and Standard Chartered fined USD 100 mln over IPO sponsorship oversight
Mar 15, 2019 (China Knowledge) - The Hong Kong Securities and Futures Commission (SFC) has hit investment banks UBS, Morgan Stanley, Merrill Lynch and Standard Chartered with a combined fine of USD 100 million for their failure in carrying out their duties as an IPO sponsor.
UBS bore the brunt of the fine with its two units UBS AG and UBS Securities Hong Kong ordered to pay USD 47.7 million for their failure to conduct due diligence over the quality of the listing candidates in three IPOs as joint sponsors.
In addition, UBS has been banned by the SFC from sponsoring IPOs for a year.
The three IPOs in question are that of China Forestry Holdings in 2009, Tianhe Chemicals Group in 2014 as well as another unnamed IPO as investigations are still under way.
The SFC said that UBS and Standard Chartered had not verified China Forestry’s assets and use of rights in Yunnan and Sichuan province while UBS, Morgan Stanley and Merrill Lynch had not conducted property interviews with Tianhe Chemical’s clients to verify its business.
China Forestry collapsed two years after listing in 2009 while Tianhe Chemicals has been suspended from trading since 2015.
The hefty fines levied on these companies highlight the importance the Hong Kong SFC places on IPO sponsors to maintain high standards in order to protect the investing public and to maintain the reputation of the Hong Kong financial market.
UBS, Morgan Stanley and Merrill Lynch were among the top five book runners for IPO and secondary market funds raised on the Hong Kong stock exchange while Standard Chartered has since closed its IPO sponsor activities.
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