Martin Wheatley, the outgoing head of Hong Kong’s securities market regulator, said today that sponsors’ due diligence of initial public offerings has been “inadequate” at times.
“In many cases, sponsors are spread too thinly in terms of the number of deals they’re bringing to the market at any one time”.
Hong Kong’s regulator may make sponsors of IPOs in the city liable for statements in their clients’ prospectuses to prevent fraud of locally listed Chinese companies.
Never ever heard any MAS official say there was anything wrong with sponsors’ due diligence despite some new listcos coming out with profit warnings shortly after being listed.
I’ve been told that MAS does not inspect sponsors to ensure that they are following “best practices”. It is left to SGX. A few years ago, a then prominent IPO sponsor was “suspended” from bringing new listings to market.
The HK proposal to make sponsors of IPOs in the city liable for statements in their clients’ prospectuses is a gd one, and should be adopted to prevent fraud in listing S-Chips.