The Securities & Futures Commission (SFC) of Hong Kong has toughened its stance against errant banks by ramping up fines.
Although the $24.7m it collected last year was a drop from the previous year, if one excluded the record $51m fine it imposed on HSBC Private Bank (Suisse) in 2017, collections in 2018 were actually double that in 2017 and three times that in 2016. The data was part of a report released by law firm Freshfields Bruckhaus Deringer.
The SFC has confirmed that it intends to prosecute 60 individuals and companies in 2019. Amongst those the regulator found wanting, Citigroup Global Markets Asia was fined $7m for its role in sponsoring a doomed Real Gold Mining IPO which was floated in 2009 but the company was delisted because of financial mismanagement only two years later.
UBS disclosed in its annual report last year that it was facing an 18 month IPO ban and $152m fine but was appealing the SFC's ruling.
In February 2018, the SFC indicated that corporate fraud, insider dealing and market manipulation, intermediary misconduct, sponsor misconduct and money laundering remain priority areas for enforcement
That same month, the SFC obtained orders from the Hong Kong Court of First Instance in proceedings against Qunxing Paper Holdings Company Limited (Qunxing), its former directors and its subsidiary, to compensate investors who subscribed for Qunxing shares in its 2007 initial public offering or bought them in the secondary market between 2007 and 2011. The Court found that the defendants had disclosed false or misleading information in Qunxing's 2007 prospectus and in its results announcements for the financial years ended on 31 December 2007 to 31 December 2011, by materially overstating turnover and understating bank borrowings.
In August 2018, the MMT found the former CEO of China AU Group Holdings Limited (China AU) and her related persons had engaged in false trading in China AU shares. The conduct in question appears to have involved the former CEO, with the assistance of two others, using various securities trading accounts to buy and sell a substantial amount of shares in China AU, thereby creating a false or misleading appearance of active trading in China AU shares and in their price.
In May 2018, the SFC reprimanded and fined a global investment bank HK$57m, to resolve concerns over its work as sole sponsor for a 2009 listing10. The SFC found what it regarded to be deficiencies in customer due diligence, and in supervision of the deal team. In July 2018, the SFC reprimanded and fined a Chinese investment bank HK$24m over concerns about its work as sole sponsor in a listing application during 2013 and 2014. The SFC found that the sponsor failed to conduct reasonable due diligence before submitting the listing application, including with respect to the listing applicant's customers, and to keep a proper audit trail of work performed.