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China launched the tech-focused STAR Market in Shanghai in
mid-2019, along with the introduction of a U.S.-style,
registration-based initial public offering (IPO) system in that
market.
The Securities Association of China (SAC) said late on Friday
that a joint probe recently with the Shanghai Stock Exchange
over STAR IPOs had exposed issues with 19 institutional
investors.
The problems included weak internal controls, inadequate
rationale for price-settings, non-compliance with stipulated
procedures and improper storage of working papers, the SAC said
in a statement, without identifying the companies.
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.
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.
(Reporting by Samuel Shen and Andrew Galbraith; Editing by Kim
Coghill)
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