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Enoch Yiu

Hong Kong’s securities watchdog slapped a record fine of HK$786.7 million (US$100.2 million) on investment banks UBS, Morgan Stanley, Merrill Lynch and Standard Charted for failing in their duties as IPO sponsors.
Swiss lender UBS bore the brunt of the fine. Its two units UBS AG and UBS Securities Hong Kong were ordered to pay HK$375 million for failing to conduct proper due diligence on the quality of the listing candidates in their role as one of the joint sponsors in three initial public offerings, according to a statement from the Securities and Futures Commission.
The three IPOs were of China Forestry Holdings in 2009; Tianhe Chemicals Group in 2014; and another listing application, which the SFC did not name as the investigation was ongoing.
The SFC banned UBS Securities from sponsoring IPOs for one year.

The regulator also suspended the licence of former UBS banker Cen Tian for two years for failing in his supervisory duties in China Forestry’s IPO.
The commission fined US investment banks Morgan Stanley Asia HK$224 million and Merrill Lynch Fast East HK$128 million for failures as joint sponsors in Tianhe Chemicals’ IPO.
The SFC also fined Standard Chartered Securities (Hong Kong) HK$59.7 million for failing in its duty as joint sponsor of China Forestry Holdings.

The SFC said UBS and StanChart had not verified the China Forestry’s assets and use of rights in Yunnan and Sichuan provinces in mainland China.
In Tianhe’s IPO, UBS, Morgan Stanley and Merrill Lynch had not conducted proper interviews with the company’s clients to verify its businesses, the SFC said.
China Forestry collapsed two years after its 2009 listing. Tianhe has been suspended from trading since 2015.
Hong Kong’s securities regulator takes listings sponsors to task, imposes fines of U$24.7m in 2018
Ashley Alder, chief executive of the SFC, said that “the sanctions send a strong and clear message to the market” and that the commission “will not hesitate to hold errant sponsors accountable for their misconduct”.
“The outcome of these enforcement actions for sponsor failures – particularly failings when conducting IPO due diligence – signify the crucial importance that the SFC places on the high standards of sponsors’ conduct to protect the investing public and maintain the integrity and reputation of Hong Kong’s financial markets,” Alder said.

Hong Kong law allows the SFC to impose a maximum fine of HK$10 million or three times the profit gained or loss avoided as a result of the misconduct.
UBS said that the bank was pleased to have resolved legacy issues relating to its Hong Kong IPO sponsorship licence. “We look forward to continuing to service our clients in Hong Kong,” a UBS spokeswoman said in a statement.
Morgan Stanley declined to comment.
A Standard Chartered spokeswoman said: “We welcome the opportunity to resolve this case with the SFC, which stems from matters arising over 10 years ago. We note that on 8 January 2015, Standard Chartered Group announced the closure of institutional cash equities, equity research and equity capital markets activities (including IPO sponsor activities).”
Securities and Futures Commission imposes a whopping HK$497m in fines last year
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 market last year.
UBS was the fifth largest book runner in Hong Kong equity fundraising, conducting 24 deals for a combined US$3.95 billion last year, giving it a market share of 6.2 per cent, according to data from Refinitiv.
Morgan Stanley topped the league with 26 deals raising US$7.48 billion last year, accounting for a market share of 11.7 per cent.


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Hong Kong securities regulator fines top investment banks US$100 million for failures as IPO sponsors

The Swiss bank UBS’ Hong Kong units were fined by the city’s securities regulator. Photo: Reuters

Tianhe Chemicals Executive Director and Chief Executive Officer Wei Xuan meets the media in video conference at Island Shangri-la Hotel in Admiralty. 08JUN14

Recent sponsor failures in Hong Kong IPOs

Graphic for online. Top deals in the Asia-Pacific and Japan regions Top dealmakers by value, Asia Pacific, excluding Japan 2017 2018 Value (US$b) 1.111M II 11 139 1 Goldman Sachs 2 Morgan Stanley 3 Citigroup 4 UBS 5 J.P. Morgan 6 Bank of America Merrill Lynch 7 CICC 8 Deutsche Bank 9 Macquarie Group 10 Lazard Source: Mergermarket I107 135.5 105.2 MW1914.1604.8 M=18846.3 W412.9 alMill6658.7.6 =1E1414.9 55.2 ILI9z7 32.5 47.5 Number of deals in 2018 72 43 63 63 51 37 44 30 41 30 SCMP

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The three chairmen of SFC - from right - former chairman Eddy Fong, incumbent chairman Carlson Tong Ka-shing and next chairman Tim Leung Tim-lui at the farewell dinner on Oct 9, 2018. Photo: SFC

Interview with SFC Outgoing Chairman Carlson Tong Ka-shing at Cheung Kong Centre in Central. 12OCT18 SCMP / Jonathan Wong

The New York Stock Exchange building is seen adorned with banners on September 19, 2014. A buying frenzy sent Alibaba shares sharply higher Friday as the Chinese online giant made its historic Wall Street trading debut. In early trades after the record public share offering, Alibaba leapt from an opening price of $68 to nearly $100 and, while it dropped back, was still up some 38 percent at $94.08 after 10 minutes. AFP PHOTO/Jewel Samad

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Securities Futures and Commission deputy chief executive Julia Leung Fung-yee speaks to delegates at the 2018 Refinitiv Pan Asian Regulatory Summit, on Tuesday in Hong Kong. Photo: SCMP/Dickson Lee

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Swiss bank UBS’ two units ordered to pay HK$375 million by the Securities and Futures Commission
Former UBS banker Cen Tian’s licence suspended for two years


Swiss investment bank UBS bears the brunt of the record penalty imposed by the Securities and Futures Commission, which also results in the suspension of its former banker Cen Tian’s licence for two years .


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Standard Chartered Bank

Financial regulation

Regulation

Hong Kong securities regulator fines top investment banks US$100 million for failures as IPO sponsors

Swiss bank UBS’ two units ordered to pay HK$375 million by the Securities and Futures Commission Former UBS banker Cen Tian’s licence suspended for two years

Swiss bank UBS’ two units ordered to pay HK$375 million by the Securities and Futures Commission

Former UBS banker Cen Tian’s licence suspended for two years