(FILES) This file photo taken on December 12, 2013 shows the headquarters of JP Morgan Chase on Park Avenue in New York. JPMorgan Chase reported a dip in first-quarter earnings April 13, 2016 as revenues in key trading categories fell and it set aside additional reserves for loans in the slumping energy sector. Net income for the first quarter was $5.5 billion, down 6.7 percent from the year-ago period. / AFP PHOTO / STAN HONDA
HONG KONG: JPMorgan Chase & Co has become the first global investment bank to fall foul of Hong Kong’s stricter IPO sponsorship rules, dealing a blow to its reputation in the region.
The Hong Kong stock exchange introduced tougher disclosure rules in 2014, which can make banks criminally liable if a listing prospectus is found to have misled investors.
It returned a listing application for Shenhua Health Holdings Ltd, a subsidiary of monosodium glutamate (MSG) producer Fufeng Group Ltd, on March 29 saying it needed more information, exchange data showed. JPMorgan Securities (Far East) Ltd acted as sole sponsor of the IPO.
Only seven other initial public offerings (IPOs) have been returned since the new rules came into effect. After applications are returned, companies must wait at least eight weeks before re-submitting an application.
The new rules aimed to crack down on sloppy work by underwriters and issuers that filed incomplete or inaccurate documents, particularly after a series of scandals at Chinese companies that ran into trouble after listing in Hong Kong.
JPMorgan declined to comment on Shenhua Health’s listing application on Thursday. Fufeng Group, the world’s largest producer of food flavour enhancer MSG, didn’t return a Reuters request for comment after regular business hours.
The sponsors of the previous seven listings on the stock exchange’s main board and Growth Enterprise Market (GEM) that needed further vetting were all from China and Hong Kong, exchange data showed. - Reuters
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