Bank gives up role in sponsoring IPOs after job failures
The financial regulators have sidelined an investment bank from acting as a listing sponsor until next year for due diligence failures. Two of the bank's officers will also not take part in any listing activity for most of this year.
As a settlement with the Securities and Futures Commission and Hong Kong Exchanges and Clearing, CSC Asia voluntarily agreed not to act as sponsor for new listings for 13 months from yesterday. Andrew Chiu Chi-kin and Howard Tang Ho-wai, the company's officers, will not act as supervisors for any new listing for eight months.
CSC is one of five sponsors being investigated by the SFC for due diligence failure.
'CSC had failed to comply with various requirements under the code of conduct by failing to act with due skill, care and diligence when preforming due diligence into the two listing applications and ensure that the prospectuses and the submissions made to HKEx were prepared to the required standard,' the SFC said.
In a listing application made in 2003, the SFC found its sponsor CSC had not done enough due diligence work in a number of areas, such as the relationship between the directors and shareholders with one of its suppliers and whether the listing applicant had complied with mainland regulations on social insurance. It also did not check the expiry date of the certificates of a number of major products sold.
The exchange listing division in the same application also found that there were a lot of material differences in disclosure in the first draft of prospectuses it submitted in October 2003 and the revised versions of the 11th draft submitted in August 2004. This listing application lapsed in December 2004.
In another case, the SFC found CSC had not done adequate due diligence in checking if the listing application complied with the continuous ownership requirement of 24 months under the Growth Enterprise Market listing rules.
CSC also had internal control weakness with no audit trail, and staff were not trained adequately in due diligence work.
'The present case shows that CSC, Andrew Chiu and Howard Tang acted negligently when they submitted the two listing applications to HKEx. They failed to take reasonable care to ensure that the contents of the prospectuses and submissions were accurate and complete,' SFC executive director Alan Linning said.