China’s largest investment bank CICC says sorry after disciplinary action by Hong Kong regulator on breaching city’s takeover code

Two CICC associate units failed to promptly disclose hedging trades in 2019 in companies where the group acted as takeover adviser

CICC has apologised for the oversight, promised steps to tighten reporting and compliance

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A pedestrian walks past a China International Capital Corp’s securities brokerage branch in Beijing in July 2016. Photo: Bloomberg

Published: 7:00am, 19 Jun 2020Updated: 4:17pm, 19 Jun 2020

China International Capital Corp has been criticised by Hong Kong’s securities watchdog for breaching the city’s takeover code.

The investment banking group, ranked fourth last year in Asia outside Japan in mergers and acquisitions advisory, admitted its units failed to promptly disclose trading involving shares of Dalian Port and Maanshan Iron & Steel in June last year.

The offence happened at the same time the group’s Hong Kong unit acted as financial adviser to Broadford Global in its takeover offer for Dalian Port, and to Baosteel in its offer for Maanshan, the Securities and Futures Commission said in a statement on Thursday.

The CICC group has apologised for its oversight on the disclosure obligations of its delinquent units, adding that it takes the matter extremely seriously. It has also taken steps to improve compliance and tighten reporting rules.

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The disciplinary action reflects the SFC’s tough stance in policing the market, saying its rules are “intentionally onerous” to keep the market players in line and protect its integrity. The commission imposed a record HK$1.29 billion of fines (US$166 million) last year in stock-offering lapses, according to law firm Freshfields Bruckhaus Deringer.

In October 2017, the SFC barred former CICC trader Xu Tao from the industry for four months for taking order instructions from clients through his mobile phone and WeChat messaging app in early 2015, when he was an investment consultant with the CICC group.