Hong Kong regulator fines Bocom unit for IPO sponsor failures

Julie Zhu

HONG KONG, March 15 (Reuters) - Hong Kong's securities

regulator has fined and reprimanded a subsidiary of Bank of

Communications (Bocom) for failing to "discharge its

duties" as a sole sponsor of a listing application of a mainland

Chinese company in the city, it said on Wednesday.

Bocom International (Asia) Limited (BIAL), a Hong Kong

investment banking unit of Bocom, was fined HK$15 million

($1.93 million) for due diligence failures related to China

Huinong Capital Group Limited, the Securities and Futures

Commission (SFC) said in an e-mailed statement.

Breaches of Hong Kong's code of conduct included failure to

carry out sufficient checks to verify information provided

before submission of the listing application on China Huinong's

behalf in late 2014. The city's bourse has yet to approve the


The SFC said that BIAL should have done more to provide

detail on lending by China Huinong that had not been secured by

collateral but had been guaranteed by companies or individuals.

The regulator added that BIAL had cooperated with it in

accepting the disciplinary action. "There is no evidence to

suggest a systemic failure in BIAL's policies, procedures and

practices relating to its sponsorship work," the SFC said.

BIAL and Bocom, one of China's largest banks, did not

respond immediately to requests for comment.

Wednesday's action comes against the backdrop of the

regulator's increased efforts to scrutinise the sponsorship of

stock listings in the territory, which has been the world's

biggest IPO market since 2015.

In January the SFC filed a suit against Standard Chartered

, UBS Group AG and four other parties over the

2009 IPO of timber company China Forestry Holdings Co


Standard Chartered and UBS separately disclosed late last

year that the SFC was investigating their role as sponsors of

unnamed IPOs and that the regulator's actions could result in

financial consequences.

China Forestry raised $216 million in the 2009 IPO, but its

shares have been suspended since January 2011 and the company is

now in liquidation and in the process of being delisted after

its auditor said it had found possible accounting


($1=7.7683 Hong Kong dollars)

(Reporting by Julie Zhu; Editing by David Goodman)