Exclusive: SFC reveals what’s next in IPO sponsor crackdown

Author: | Published: 27 Apr 2012

Hong Kong’s IPO sponsor crackdown is set to continue with more cases under review, the head of enforcement at the city’s market regulator has told IFLR. But market participants expect fewer IPOs as a result. Hong Kong’s Securities and Futures Commission (SFC) this week imposed a record HK$42 million ($5.4 million) fine on Mega Capital, the sole financial adviser on the troubled 2009 listing of China’s Hontex International. The move aimed to address Mega Capital’s failure to conduct adequate due diligence in relation to Hontex and claims made in the IPO prospectus.

The regulator is also set to begin market consultations on sponsor liability next month, in keeping with SFC head Ashley Alder’s plans to focus on sponsor performance this year. Such consultations will contain proposals examining whether sponsors could face civil and criminal liabilities if they are found to have misled investors when preparing companies, Alder has said....