SFC Fines UBS $48 Million, Suspends HK Subsidiary License

Standard Chartered was also fined, as both companies failed to meet compliance standards surround IPO sponsorship

Swiss banking giant UBS has been fined HKD 375 million ($47.8 million) by the Securities and Futures Commission.

The Hong Kong regulator announced the decision on Thursday, saying that UBS’ local subsidiaries failed to “discharge their obligations” with regard to the initial public offerings of three companies – China Forestry Holdings, the Tianhe Chemicals Group, and one unnamed firm.

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Alongside the fine, UBS Securities Hong Kong has had its license to advise on corporate finance partially suspended for a year.

That will mean the company cannot act as a sponsor for any firm that submits a listing application to the SFC.

A former executive at the Swiss bank, Cen Tian, has also had his license revoked. Tian was acting as sponsor principal for UBS between 2007 and 2013.

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Can’t see the forest

UBS was not the only major firm to feel the wrath of the SFC this week.

On the same day that it announced its fine for the bank, the SFC also released a statement saying that Standard Chartered would be penalized for similar behavior.

The bank will have to pay an HKD 59.7 million ($7.61 million) fine for its role in the China Forestry IPO.

According to the SFC, both UBS and Standard Chartered failed to adequately assess claims made by China Forestry.

Amusingly, neither company verified that the firm actually owned any forests. And, after an earthquake struck the site that the forestry company said it owned, neither of the two banks went to see if there were any trees still standing.

The two banks also failed to check whether or not China Forestry was actually allowed to chop down the forests it said it owned or if it was adhering to local regulations.

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