The Hong Kong Securities and Futures Commission (SFC) has decided to ban Mr Lai Voon Wai, a former responsible officer (RO) of CCB International Capital Limited (CCBIC) and BOCOM International (Asia) Limited (BIAL), from re-entering the industry for five years for failing to discharge his supervisory duties as a sponsor principal in charge of supervising the execution of two listing applications.
SFC bans a former RO of CCBIC and BOCOM International for IPO sponsor failures
The SFC found that the failures committed by CCBIC and BIAL, as the sole sponsor in the listing applications of Fujian Dongya Aquatic Products Co., Ltd. (Fujian Dongya) and China Huinong Capital Group Company Limited (China Huinong) respectively, were attributable to the neglect on the part of Lai.
Lai, who was a Managing Director of Corporate Finance and an RO of CCBIC at the material time, failed in his role as the sponsor principal to
- properly supervise the due diligence process on the third party payment arrangement between Fujian Dongya, its overseas customers and their third party payers;
- apply his mind as to the reasonableness of explanations by Fujian Dongya on third party payments despite various red flags raised in the due diligence process; and
- supervise the due diligence interviews with Fujian Dongya’s customers.
Mr Thomas Atkinson, the SFC’s Executive Director of Enforcement, commented:
The disciplinary actions against the sponsors and sponsor principal involved in the listing applications of China Huinong and Fujian Dongya reflect the importance that the SFC attaches to their roles as gatekeepers of the IPO process and market quality. They should also pay heed to the SFAT’s Determination which sends a strong and clear message to the market that sponsor principals should properly supervise and take full responsibility for the work of the transaction team.