The Hong Kong financial regulator's latest investigations
into fraudulent IPOs has created unnecessary fear among
sponsors, according to market participants.
The Securities and Futures Commission (SFC) has launched
investigations into Standard Chartered and UBS for their roles
in two respective public offerings raised through improper
But counsel in Hong Kong argue that the SFC’s
extension of the scope of its investigation to cover the
sponsors, as opposed to the issuer only, has led to
'paranoia’ in the IPO sponsorship market.
"It is fair to say that there will be paranoia in the market
from the point of view of sponsors," said a lawyer at an
international firm in Hong Kong. He added that, given the
vigour of the SFC’s enforcement action in recent
years, there are understandable concerns over how the regulator
will flex its muscles in holding sponsors responsible.