China’s market regulator is investigating China International Capital Corp (CICC), considered China’s Goldman Sachs, over a failure to perform due diligence in its capacity as sponsor of a local chip company’s new share listing in 2021, the investment bank said on Sunday.
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CICC has received a notice of case filing issued by the China Securities Regulatory Commission (CSRC) on October 11, which said the bank “is suspected of failing to exercise due diligence” in its sponsorship of the initial public offering (IPO) of chip company S2C Limited, CICC said in a filing with the Hong Kong stock exchange.
In China, a case filing by the regulator means it will carry out an investigation, said Tom Chan Pak-lam, permanent honorary president of the Institute of Securities Dealers, an industry body for stock brokers. CICC said the CSRC decided on September 25 to file a case against CICC in accordance with the securities law of mainland China and other related regulations.
“The action taken by the CSRC against CICC is sending a clear message to the market that the regulator is keen on keeping market integrity and quality while it is pushing the stimulus measures to reboot the investment markets,” Chan said. “This is positive to establish the confidence of investors.”
CICC will “actively cooperate with the CSRC’s relevant work and will perform its obligation of information disclosure in strict accordance with regulatory requirements”, the filing said. “Currently, the operations of the company remain normal.”
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The CSRC has tightened the screws on potential and existing initial public offerings (IPOs) since March this year when so-called “broker butcher” Wu Qing, freshly appointed as the watchdog’s head, vowed to weed out unqualified companies and revive confidence in the country’s US$9 trillion stock market.