Three Firms Fined Over Tianhe IPO
Hong Kong’s Securities and Futures Commission fined UBS, Morgan Stanley and Merrill Lynch this month for inadequate due diligence in the 2014 initial public offering of Tianha Chemicals Group Ltd.
UBS’s penalties are also based on its handling of IPOs for two other companies on the Hong Kong Stock Exchange. In addition to its fine of HK$375 million (U.S. $48 million), UBS was suspended for one year from sponsoring listing applications in Hong Kong. Morgan Stanley and Merrill Lynch were fined HK$224 million and HK$128 million, respectively, just for work on the Tianhe offering.
The SFC chided all three institutions for sloppiness in validating information that underlay Tianhe’s stock offering, which raised approximately U.S. $654 million in its offering.
“Sponsors have considerable control over the listing process,” the commission said in its March 14 announcement of the penalties against UBS. ”When sponsors perform substandard due diligence work and companies unsuitable for listing are nevertheless listed and eventually fail, their failure may cause enormous loss to public investors and jeopardize their confidence in Hong Kong’s financial markets.”
Hong Kong’s Securities and Futures Commission fined UBS, Morgan Stanley and Merrill Lynch this month for inadequate due diligence in the 2014 initial public offering of Tianha Chemicals Group Ltd.
UBS’s penalties are also based on its handling of IPOs for two other companies on the Hong Kong Stock Exchange. In addition to its fine of HK$375 million (U.S. $48 million), UBS was suspended for one year from sponsoring listing applications in Hong Kong. Morgan Stanley and Merrill Lynch were fined HK$224 million and HK$128 million, respectively, just for work on the Tianhe offering.
The SFC chided all three institutions for sloppiness in validating information that underlay Tianhe’s stock offering, which raised approximately U.S. $654 million in its offering.
“Sponsors have considerable control over the listing process,” the commission said in its March 14 announcement of the penalties against UBS. ”When sponsors perform substandard due diligence work and companies unsuitable for listing are nevertheless listed and eventually fail, their failure may cause enormous loss to public investors and jeopardize their confidence in Hong Kong’s financial markets.”
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