China Punishes Institutional Investors As It Tightens IPO Price-Setting

China’s securities regulators punished 19 institutional investors as Beijing’s market crackdowns continue.

The Securities Association of China (SAC) announced late on Friday that a joint probe with the Shanghai Stock Exchange over listings on its technology-focused STAR market had exposed issues with the 19 institutional investors.

The problems included weak internal controls, inadequate rationales for price settings, non-compliance with stipulated procedures and improper storage of working papers, the SAC said in a statement, without identifying the companies.

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One insurer has been temporarily banned from participating in the institutional portion of IPO subscriptions, while eight fund houses and one asset manager have been barred from the share placement market for a month, according to the statement.

China launched the tech-focused STAR Market in Shanghai in mid-2019, along with the introduction of a US-style, registration-based initial public offering (IPO) system in that market.

SAC said regulators will strengthen supervision and step up penalties against misbehaviour to maintain order for IPO price-setting and protect investors.

China has already replicated the registration-based IPO system to Shenzhen’s start-up board ChiNext, and aims to gradually roll out the mechanism to the rest of China’s stock market, which still uses a system based on regulators’ approvals.

Reuters and Sean O’Meara

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This story was updated with a new headline and additional details.

Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.