Hong Kong securities regulator suspends UBS as IPO sponsor for 18 months
Hong Kong’s securities regulator has blocked UBS from sponsoring initial public offerings for 18 months, the Swiss bank said in its annual report released on Friday, adding it planned to appeal against the decision.
The Securities and Futures Commission (SFC) had been investigating UBS’s role as a sponsor – or lead underwriter – of some IPOs listed on the Hong Kong stock exchange, it said.
“In March 2018, the SFC issued a decision notice in relation to one of the offerings under investigation,” the bank said.
“The notice provides for a fine of HK$119 million (US$15.2 million) and a suspension of UBS Securities Hong Kong Limited’s ability to act as a sponsor for Hong Kong listed initial public offerings for 18 months,” it said.
While the action is expected to dampen UBS’s investment banking operations in Asia, UBS said it intended to appeal against the SFC’s decision.
UBS did not specify what led to the fine and suspension.
The SFC declined to comment.
UBS and Standard Chartered disclosed separately in 2016 that they were under investigation by the SFC for their roles as sponsors of unidentified IPOs.
In 2009, UBS and Standard Chartered were joint sponsors of the US$216 million IPO of China Forestry Holdings, but the shares were suspended in 2011 after financial irregularities were discovered.
In January 2017, the SFC filed a writ against both banks and audit firm KPMG, seeking unspecified damages for losses incurred by certain shareholders in China Forestry.
Separately on Friday, the Hong Kong Securities and Futures Appeals Tribunal granted UBS and Standard Chartered an extension for their appeals against the SFC’s actions, but did not specify the reason for the punishments.
Standard Chartered declined to comment.
While UBS can in theory still work on IPOs in Hong Kong in more minor roles, the suspension from sponsoring the deals comes just as the city is gearing up for a series of potential blockbuster floats.
Xiaomi, the Chinese smartphone and home appliance maker, is expected to seek a valuation of up to US$100 billion while other expected notable floats include that of Lufax, the Chinese wealth management platform backed by Ping An, the insurance giant.
Additional reporting by Meng Jing