Standard Chartered said Hong Kong's securities regulator is investigating its role as a joint sponsor of an initial public offering (IPO) in 2009 and could take unspecified action against the British lender's Hong Kong unit. The disclosure of the probe on Tuesday by Standard Chartered comes days after Swiss bank UBS also said Hong Kong's Securities and Futures Commission (SFC) is investigating its role as sponsor of certain unnamed stock market listings in the city. In its earnings release, Standard Chartered said the SFC had informed the bank that it intended to take action against Standard Chartered Securities (Hong Kong) Ltd (SCSHK) in relation to its role on the IPO and that such action, if taken, may result in financial consequences for SCSHK. The British bank did not identify the IPO concerned.
Standard Chartered's Hong Kong brokerage unit, previously called Cazenove Asia Ltd, acted in only two IPOs in 2009, the $216 million listing of timber company China Forestry Holdings Co Ltd and China XLX Fertiliser Ltd, according to stock exchange data. The bank no longer has an IPO sponsorship license in Hong Kong.
UBS was the other co-sponsor of China Forestry's deal with Standard Chartered.
Trading in China Forestry has been suspended since January 2011 and the company is now in liquidation and delisting after the company's auditor said it had found possible accounting irregularities.
Standard Chartered's management told an earnings media call the investigation involved only one IPO transaction and that discussions with the SFC were ongoing.
