Real Gold Mining : Hong Kong regulator fines Citi $7 million for failings as Real Gold IPO sponsor
The disciplinary action is the second in what is expected to be a series of measures by the Securities and Futures Commission (SFC) against banks for misconduct when sponsoring IPOs in the Asian financial hub.
The SFC said on Thursday that Citigroup Global Markets Asia had failed to conduct adequate and reasonable due diligence on Real Gold's customers.
It also failed to properly supervise its staff when carrying out the sponsor work on the listing application, the SFC said.
The due diligence on Real Gold's customers was done over the telephone by the most junior members of Citi's transaction team with little supervision, using phone numbers provided by the miner, without independently verifying customers' identities and details.
Trading in Real Gold's shares has been suspended since 2011.
Citi said in a statement the resolution of the issue did not involve any licence suspension and "does not place any constraints on Citi's business activities or on any individual in Hong Kong or elsewhere".
It added, "Citi cooperated fully with the SFC's investigation and has already taken appropriate action to ensure that it meets its legal and regulatory obligations at all times."
In March, the SFC said it had found serious deficiencies in the work of several IPO sponsors from its review of new listings between 2013 and 2017.
The regulator had issued proceedings against eight IPO sponsors, its enforcement director, Tom Atkinson, said that month.
A few days earlier, UBS said in its annual report the SFC had blocked it from sponsoring initial public offerings for 18 months, adding it planned to appeal against the decision.
(Reporting by Alun John; Editing by Himani Sarkar)
By Alun John