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China punishes underwriters, bankers for lax due diligence

SHANGHAI, April 6 (Reuters)China’s securities regulator announced penalties against a slew of underwriters and individual bankers on Tuesday, sending a clear warning regarding sloppy due diligence.

Nearly 40 individuals and eight investment banks were punished for inadequate due diligence in the first quarter, notices on the website of the China Securities Regulatory Commission (CSRC) showed.

Some 29 deals were involved ranging from share and bond sales to mergers and acquisitions. China International Capital Corp (CICC) 3908.HK and Citic Securities 600030.SS were among the underwriters urged to take corrective measures.

The punishments vary, but most individuals are banned from certain business practices for three months, notices on the CSRC website showed, while the brokerages were mostly urged to take corrective measures and improve their internal controls.

China has stepped up supervision of its capital markets in recent months as regulators seek to rein in financial risks following years of deregulation.

Top securities regulator Yi Huiman last month urged underwriters to tighten scrutiny on companies seeking to list their shares, vowing to punish those trying to bring “sick” companies to the initial public offering (IPO) market.

(Reporting by Samuel Shen and Andrew Galbraith; editing by Jason Neely)

((samuel.shen@thomsonreuters.com; +86 21 20830018; Reuters Messaging: samuel.shen.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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