Two investment banks and a financial executive have been hit with heavy sanctions by Hong Kong regulators for his role in the attempted listing of a seafood company on the city’s stock exchange in 2017.
Hong Kong’s Securities and Futures Appeals Tribunal (SFAT) recently affirmed a decision of the Securities and Futures Commission (SFC) to ban Lai Voon Wai, a former responsible officer of CCB International Capital Limited (CCBIC) and BOCOM International (Asia) Limited (BIAL), from reentering the industry for five years (until September 2025) for “failing to discharge his supervisory duties” as a sponsor principal in charge of supervising the execution of two listing applications. One of those listings was Fujian Dongya Aquatic Products Co., a Chinese seafood processing firm.
Hong Kong stock market regulators in 2017 halted Dongya’s listing due to questions raised in regard to paperwork relating to a previous unsuccessful listing. The SFC asked underwriter CCB International (a division of Construction Bank of China, one of China’s big four state-owned banks) to explain its records of sales made by Dongya Aquatic Products, that in some instances appeared to have been paid for by third parties. The records were compiled as part of a failed 2014 Dongya listings bid in Hong Kong.
The SFC found the failures committed by CCBIC and BIAL – both of which were also been fined by the regulator – as the sole sponsor in the listing applications of 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 CCBIC’s managing director of corporate finance of CCBIC at the time, was censured for failing 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. He was also censured for failing to supervise due diligence interviews with Fujian Dongya’s customers.
Located in Dongyang, Fujian Province, on China’s southeast coast, Dongya is one of many Chinese seafood firms that have sought to raise capital through public listings in recent years. Listing in Hong Kong is a much more complex, demanding process, but the liquidity pool in the city has traditionally been wider than those of the mainland bourses, though the gap has been narrowing as foreign investors have been allowed more access to the Shanghai and Shenzhen exchanges.
Photo courtesy of Kapi Ng/Shutterstock
