SFC Suspends License of Ex-China Merchants Securities Banker

The Hong Kong regulator says that Wu Yinong failed to meet compliance standards relating to a 2009 IPO

The Hong Kong Securities and Futures Commission issued a statement on Wednesday stating that a former executive at China Merchants Securities (CMS) has had his license suspended.

According to the SFC, Wu Yinong, who was licensed by the regulator as a ‘responsible officer’ and a ‘sponsor principal,’ breached compliance procedures related to an initial public offering (IPO), which CMS sponsored, in 2009.

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In its statement, the SFC did not name the company which CMS had sponsored. But, according to Reuters, the Chinese investment bank worked on two IPOs in 2009.

One, which was valued at $184 million, was for sausage casing maker Shenguan Holdings. Alongside this was the $231 million float of China Metal Recycling (CMR), a scrap processor which went bust in 2013.

Given some of the legal wrangling and accusations of fraud surrounding CMR, it seems more plausible that the SFC’s case against Yinong pertains to the IPO of the scrap processor.

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Scrap deal gone wrong?

Yinong, who left CMS in 2012, was working at China Investment Securities International until December of last year. Regulatory filings indicate that he has not worked since then.

In its statement, the SFC said that it had suspended Yinong’s license for an 18 month period which will come to an end in August of 2020.

According to the regulator, Yinong failed to “exercise due skill, care and diligence” when working on the IPO. He also didn’t maintain “standards of conduct” set by CMS.

It appears as though Yinong has also been fined by the SFC, but the regulator did not elaborate upon what the former investment banker’s punishment will be.

“The SFC’s disciplinary action against Wu is related to its ongoing disciplinary actions against CMS and its co-sponsor for the listing application in question,” said the regulator. “The SFC will not disclose the details of its disciplinary action against Wu until the conclusion of its actions against CMS and its co-sponsor.”

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