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UPDATE 1-HK fines, reprimands ICBC units for role in 2009 IPO
May 21, 2014 / 10:31 AM / 3 years ago

UPDATE 1-HK fines, reprimands ICBC units for role in 2009 IPO

* ICBC units fined HK$25 mln in total for real estate developer IPO

* Chinese bank says respects SFC decision, to continue to strengthen compliance (Adds ICBC comment, details of Powerlong’s 2009 IPO)

HONG KONG, May 21 (Reuters) - Hong Kong’s securities regulator fined and reprimanded two units of the world’s third-largest bank by value, Industrial and Commercial Bank of China (ICBC), for their roles in the 2009 initial public offering of Powerlong Real Estate Holdings Ltd.

The Securities and Futures Commission (SFC) fined ICBC International Capital Ltd and ICBC International Securities Ltd HK$12.5 million ($1.61 million) each, a tiny fine compared to the bank’s $201.4 billion market value.

“ICBCI respects the decision of the SFC in respect of this 2009 legacy matter and we will use this ruling as a further impetus to continue to strengthen the compliance management and enhance the professionalism of our team,” Mary MacLeod, deputy chief executive of ICBC’s investment banking unit ICBC International, told Reuters.

The SFC said the two units of ICBC failed to conduct so-called “know-your-client” due diligence on some buyers of Powerlong shares to make sure they were independent of the issuer.

The regulator also said that some buyers were offered margin financing in excess of the buyers’ net worth in a bid to prevent the listing from falling through.

“These failings go to the heart of the sponsor’s obligation to help ensure the integrity of the initial public offering market,” said Mark Steward, the SFC’s head of enforcement.

Powerlong, a commercial real estate developer in mainland China, went public in 2009 in a deal worth $385 million. ICBC International Capital acted as joint sponsor of the IPO with Goldman Sachs and Macquarie Capital Securities Ltd.

ICBC International Securities was a joint lead manager with Goldman and Macquarie, while Macquarie was the sole global coordinator of the offering.

$1 = 7.7527 Hong Kong dollars Reporting by Elzio Barreto; Editing by Matt Driskill

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