SFC Sues Standard Chartered, UBS for Misconduct Over China Forestry IPO

The Hong Kong regulator is seeking damages over irregularities in connection with the IPO prospectus of China Forestry.

Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), has filed a suit against Standard Chartered, UBS Group and four other parties in connection with the 2009 IPO of timber company China Forestry Holdings, according to a Reuters report.

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The SFC is seeking unspecified damages for market misconduct over the IPO prospectus of China Forestry filed in November 2009, together with the company’s 2009 annual report, its annual results and the results for the first six months of 2010.

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The watchdog has also sued the company itself, its two co-founders Li Kwok Cheong and Li Han Chun, and KPMG, China Forestry’s auditor. All parties have 14 days to respond to the SFC’s suit.

Last November, Standard Chartered and UBS revealed that the SFC was probing 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 it has had its shares suspended since January 2011 and is now in liquidation and in the process of being delisted following possible accounting irregularities.

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