SFC’s crackdown on IPOs creates 'paranoia'

Author: Brian Yap | Published: 11 Nov 2016

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 financial disclosure.

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.

The...