StanChart in cross-hairs as HK IPO hunt widens

The bank is the latest ensnared in a widening investigation by Hong Kong’s regulator, which is clamping down on shoddy work by IPO sponsors. The problem appears to go back to its role in the 2009 listing of China Forestry.

Standard Chartered told investors on Tuesday that Hong Kong's Securities and Futures Commission “intends to take action” against it. The threat centres on StanChart’s role as a joint sponsor of an IPO in 2009, the bank said.

According to FinanceAsia’s research, StanChart sponsored only one IPO in 2009, the listing of China Forestry. The stock was suspended on January 26, 2011 after its auditors identified possible accounting irregularities.

UBS, which was StanChart’s co-sponsor on the China Forestry listing, told investors last week that it could lose its corporate finance licence in Hong Kong as a result of an SFC investigation. UBS and the SFC said more than one deal sponsored by the Swiss bank was under investigation.

The investigations come as Hong Kong’s watchdog takes an increasingly aggressive tone with banks. Thomas Atkinson, who started as the SFC’s head of enforcement, has said he wants to concentrate on ‘high impact’ cases.

UBS and Standard Chartered are not the only banks under investigation, a well-connected source told FinanceAsia on Friday. There are as many as a dozen investigations going on at the moment, he said.

China Forestry listed in November 2009. The stock rose precipitously before crashing in early 2011, as auditors struggled to verify the company’s accounts.

StanChart abandoned its loss-making global equities businesses in January 2015, in an abrupt end to a bold and expensive five-year expansion that struggled to make headway in competitive Asian markets.  The UK-based emerging markets bank closed its global institutional cash equities, equity research and equity capital markets businesses.

A StanChart spokesman declined to elaborate on the public statement.

Additional reporting by Danny Leung and Alison Tudor-Ackroyd.

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