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China’s securities regulator to toughen IPO price-fixing scrutiny - Capital.com

The Securities Association of China (SAC) late on Friday said it will strengthen supervision over initial public offerings (IPO) price-fixing behaviours after an investigation exposed issues with 19 institutional investors, Reuters reported citing an official statement.

The securities regulator punished 19 institutional investors following a joint investigation with Shanghai Stock Exchange into “high occurrence of uniform prices” in STAR market IPOs.

Shanghai Stock Exchange Science and Technology Innovation Board, or the STAR market, is a tech-focused market launched in 2019 that hopes to rival US Nasdaq market.

Warned against negotiating bid prices

The SAC said the joint investigation exposed insufficient rationale for price settings and non-compliance of prescribed procedures among others, Reuters reported.

In 2020, the STAR market had warned investors against negotiating bid prices in IPO subscriptions.

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China-based English daily Caixin reported last year that the STAR market said some lead underwriters failed to provide investment research reports independently and that it suspected some investors of colluding on IPO subscription prices.

Regulators to step up penalties

The SAC on Friday said that it punished one insurance firm by temporarily banning it from participating in the institutional portion of IPO subscriptions.

Eight fund houses and one asset manager have been barred from the share placement market for a month, Reuters reported citing SAC’s statement.

Regulators will step up penalties against such behaviour to protect investors, Reuters added.

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