Hong Kong’s market regulator demonstrated leniency by lifting UBS’s IPO sponsorship ban two months early due to satisfaction with its enhanced governance processes.
The Securities and Future Commission (SFC) cited a 10-month review as the basis of its decision to lift the ban against UBS which prevents the bank from leading initial public offerings.
The SFC was «satisfied after its own assessment that UBS has clear requirements and procedures in place to enable staff members to understand and properly perform their responsibilities», it said in a statement adding that compliance was further enabled by systems, controls, policies, and procedures it found effective based on a separate independent review.
Due Diligent Failures
The ban was imposed against UBS following due diligent failures on three previous IPOs – China Forestry, Tianhe Chemicals, and China Metal Recycling – that also resulted in a HK$375 million ($48.2 million) fine. In the case of Tianhe Chemicals, for example, there was a failure to follow up on a meeting with the manufacturer’s alleged largest customer, named only as X, who appeared at a meeting with no business card or other identification and left abruptly.
«The SFC would like to make clear that the standards assessed in the case of UBS are equivalent to those that are expected to be adopted by all licensed sponsors,» the regulator added.
