Hong Kong securities regulator has raided the local arms of two major Chinese brokerages as it investigates suspected misconduct tied to share offerings, sources said, the latest move by authorities to ramp up policing of an IPO boom in the city.
The Securities and Futures Commission (SFC) searched the Hong Kong offices of CCB International (CCBI) and China Securities International (CSCI) as part of its probe, said the sources with knowledge of the matter.
CCB International and China Securities International are the offshore units of Beijing-headquartered China Construction Bank Corp 601939.SS, 0939.HK and China Securities Co 601066.SS, 6066.HK, respectively.
The sources declined to be named as they were not authorised to speak to the media.
Spokespersons for the SFC and CSCI declined to comment, CCBI did not respond to Reuters request for comment. It’s not immediately known which share offerings were the focus of the latest regulatory probe.
The probe highlights a broader regulatory crackdown in Hong Kong, where a surge in IPO activity – propelling the city to the top of global fundraising rankings last year – has strained banks and exposed gaps in due diligence and listing practices.
In March, the SFC launched one of the biggest crackdown on the investment banking sector in the last decade, raiding at least two Chinese securities brokerage firms, a hedge fund, and arresting eight individuals.
That came a couple of months after the watchdog warned it had identified “serious deficiencies” in stock market listing applications, prompting it to halt some applications, tighten scrutiny and order banks to review their procedures.
In the first quarter, Hong Kong, which is the most preferred venue for Chinese companies looking to raise capital offshore, saw companies raising HK$109.9 billion ($14.03 billion) via IPOs, making it the world’s No.1 new share sale venue.
As part of the latest investigation, Hong Kong SFC officials raided the local offices of the two Chinese brokerages and took away some documents and electronic devices, said the sources.
($1 = 7.8356 Hong Kong dollars)
Reuters
