Media365
Hong Kong’s market regulator has ordered 13 investment banks to review their listing application and staffing procedures after finding widespread deficiencies in initial public offering (IPO) submissions, amid a surge in deal activity.
The Securities and Futures Commission (SFC) found that many recent listing application documents contained “serious deficiencies”, potentially because some sponsors were handling too many deals without sufficient manpower or resources, its chief executive Julia Leung Fung-yee said at a Legislative Council meeting on Monday.
“Some sponsors are overly focused on chasing deals and meeting sales targets, without ensuring they have adequate manpower and resources to maintain the quality of their due diligence and paperwork,” she said.
The regulator had suspended vetting on 16 listing applications after receiving poor-quality documentation and unsatisfactory responses to follow-up questions from sponsors, Leung said.
The SFC had then asked 13 major investment banks to review their work procedures and staffing levels and submit detailed improvement plans within three months, she added. Ideally, the SFC would like to see each staff member handle no more than six deals at the same time.
While Leung did not name the firms, she said they had collectively handled 433 IPO applications in recent years, accounting for about 70 per cent of all new listings in Hong Kong.
