The firm also failed to report Codebank's more than $10 million outstanding listing proceeds to the regulator until May 2002, and failed to make a careful inquiry into the listed company's inaccurate declaration of the fund to the exchange. Deloitte also failed to report the change in payment arrangements, the exchange said.

Codebank was delisted in January last year. It reported net losses of $52.8 million in 2001 and $90.9 million in 2000, the only periods it released full-year earnings.

Deloitte will be refrained from acting as sponsor for listings on both the main board and the Growth Enterprise Market (GEM) for nine months, while its principal supervisor Lawrence Chia Kee Loong will be suspended from working any sponsorship mandate for six months, according to the Securities and Futures Commission.

Deloitte has reached a settlement without admission of liability with the SFC and the exchange, and can carry out its duties as a compliance adviser for Shandong Molong Petroleum, whose GEM listing it had sponsored, until the end of this year. It declined to issue further details about the settlement.

However, the SFC and the stock exchange vowed that they would take a tough stance on rule breakers, although some of its past penalities were considered rather controversial.

'The SFC takes a serious view of sponsor failures. We consider them serious because great importance attaches to the role of sponsors in an initial public offering of listed shares,' said SFC director of enforcement Eugene Goyne.

'The SFC will continue to take tough action against sponsors who fail to meet the required standards and seek to exclude them from the industry for lengthy periods.'

In January last year, ICEA Capital agreed to pay a record $30 million to the SFC, also without admitting any liability, to settle a case of due diligence failure in the listing debacle of Euro-Asia Agricultural (Holdings). The firm allegedly inflated its revenue 20 times in the four years leading up to its listing in July 2001.