HK releases stricter rules for IPO sponsors

The Hong Kong Securities and Future’s Commission (SFC) released rules that would hold banks accountable for the content of prospectuses in IPOs that they sponsor but also gives them more power to ensure clients follow the rules, Reuters reported. Hong Kong’s market watchdog released the proposals following a six-month commenting period, and the rules still must be approved by Hong Kong’s Legislative Council. The rules, while not watered down as banks had hoped, did offer some changes that will be welcomed by financial institutions. Banks rather than individual bankers will be held accountable for misleading prospectuses, and sponsors will have broader authority in examining clients pre-IPO. The rules are still likely to face opposition from the local banking community, which forced an end to similar propositions in 2005.