CCB International Capital failed to conduct reasonable diligence on Fujian Dongya’s listing.
The Securities and Futures Commission (SFC) has fined China Construction Bank’s subsidiary CCB International Capital Limited (CCBIC) a $24m penalty over lapses in its role as sole sponsor of Fujian Dongya Aquatics Products Co., Ltd’s listing application in 2014.
The disciplinary action discovered that the CCBIC failed to conduct all reasonable due diligence on Fujian Dongya before submitting the listing application and keep a proper audit trail of its due diligence work.
“For instance, it did not obtain from Fujian Dongya a list of customers which could not terminate the TPP Arrangement and select some of these customers for interview. It also did not interview any third party payers,” the regulator said in a statement.
There were also concerns about the authenticity of the signatures on the Indemnity Agreements as some deals appear to have been signed by one person on behalf of different customers.
“The SFC would like to remind sponsors that before submitting a listing application to the SEHK, they should have performed all reasonable due diligence in order to gain a thorough knowledge and understanding of the listing applicant’s business and satisfy itself that all information concerning the listing applicant in respect of the application was fully, fairly and accurately presented,” the regulator added.
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