(Corrects spelling of “principals” in eighth paragraph)
HONG KONG, Oct 10 (Reuters) – Investment banks sponsoring initial public offerings (IPOs) in Hong Kong are still performing below expectations and the securities regulator will take further steps to improve standards, a senior official said on Wednesday.
“We continue to see sponsors perform below expectations,” Tom Atkinson, director of enforcement at the Securities and Futures Commission (SFC), said at the pan-Asian Regulation Summit organised by Refinitiv.
The SFC has been looking to crack down on banks not properly carrying out their duties as sponsor, or lead underwriter, as these banks bring companies to Asia’s financial hub.
“We will continue to focus on this area until standards are improved,” Atkinson said.
The SFC fined Citigroup’s Asian business HK$57 million ($7.26 million) in May for failings in its duties as sponsor of an IPO, and China Construction Bank International Capital in July.
UBS <UBSG.S > said in March the SFC had been investigating its role as a sponsor — or lead underwriter — of some IPOs listed on Hong Kong, and that the SFC had blocked it from sponsoring IPOs for 18 months. The suspension, which the Swiss bank is appealing, is not effective until its appeal has been ruled upon.
Hong Kong is on track for a bumper year of IPOs, spurred by a market rally late last year and listing reforms designed to attract high-growth technology and biotechnology companies.
Atkinson said that since 2017, the SFC had issued proposed disciplinary notices to nine firms and four sponsor principals, and that more could follow.
This is one more firm since the regulator last shared such information in February.
In his speech, Atkinson also said that the SFC was looking into what he called “nefarious networks” of listed companies, licensed dealers, money lenders, financial advisory services and placing agents, which enrich themselves at the expense of unsuspecting investors. (Reporting by Alun John; Editing by Anshuman Daga and Subhranshu Sahu)