Hong Kong’s securities regulator, the Securities and Future Commission, has publicly censured Bank of America Merrill Lynch for breaching the takeover code while advising on two M&A transactions last year.
In a statement on Wednesday, the SFC said the rebukes were made to BofA Merrill Lynch following its role in the partial offer for China Resources Enterprises and in the privatisation of Power Assets.
The regulator said BofA Merrill Lynch and its subsidiaries failed to made requisite disclosures of the cash-settled equity swaps in respect of shares in China Resources Enterprises, Power Assets, and Cheung Kong Infrastructure after the US bank was mandated to advise the clients.
The US bank's failure to report these dealings constituted a martial breach of the takeover code, the SFC said. But no fines or penalties were levied as a result of BofA Merrill Lynch's misconduct on both transactions.
State-owned China Resources Enterprises said in April last year that it was selling all its non-beer operations to its parent in HK$28 billion ($3.6 billion) deal, a move that will help the Hong Kong-listed company to focus on selling Snow Beer, China’s best-selling beer.
Separately, Cheung Kong Infrastructure, the infrastructure arm of Hong Kong tycoon Li Ka-shing's conglomerate, said in September that it planned to merge with Power Assets in a share swap deal.
The SFC said it had taken BofA Merrill Lynch’s full cooperation into account and the self-reporting of the breaches. The regulator also said that it is pleased to see the bank has introduced enhanced compliance policies and procedures and rectified the deficiencies in its reporting system to ensure future compliance with the takeover code.
In the SFC statement, BofA Merrill Lynch said it takes the matter extremely seriously and had escalated it to senior management.
A Hong Kong-based spokesman at BofA Merrill Lynch declined to provide further comment when contacted by FinanceAsia.
In the past six months the SFC has ramped up its scrutiny of dealmaking and securities trading businesses in the city, as it seeks to ensure a transparent and fair trading environment for both large institutional investors and retail investors.
Similar to BofA Merrill Lynch’s public censure, the SFC in February rebuked Goldman Sachs for breaching the takeover code while acting as an advisor to Hong Kong lender Wing Hang Bank.
Singapore's Oversea-Chinese Banking Corp acquired Wing Hang Bank for HK$38.7 billion, which it completed October 2014.