UPDATE 1-China regulator to cancel review of ShanXi Sec IPO

Wed Jul 28, 2010 10:27pm EDT

* Local media say "son underwrites father's IPO"

* Official statement says IPO needs further examination

SHANGHAI, July 29 (Reuters) - China's Securities Regulatory Commission said on Thursday it would cancel its review of ShanXi Securities' initial public offering application, stating the IPO needed further examination.

Local media reported the reason for the cancellation was because one of the two lead underwriters for the IPO was a unit of ShanXi.

ShanXi holds a 66.7 percent controlling stake in Zhong De Securities, domestic websites reported.

This is the first time in China where a subsidiary has tried to underwrite its parent's IPO and falls into legal and regulatory grey territory.

ShanXi Securities sent its IPO application for review on July 27. The commission was expected to continue to approve large IPOs after it gave Everbright Bank the go-ahead earlier this week. [ID:nTOE66P060] (Reporting by Farah Master; Editing by Jacqueline Wong)

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