WASHINGTON (dpa-AFX) - Hong Kong's securities regulator fined an Asian unit of Citigroup Inc. (C) HK$57 million or US$7.3 million for failures while leading an initial public offering in the city in 2009.
Hong Kong's Securities and Futures Commission said Citigroup hadn't conducted 'adequate and reasonable due diligence' on some aspects of the listing of Chinese company Real Gold Mining Ltd., for which it acted as sponsor.
The SFC stated dthat Citi conducted all customer interviews by telephone on telephone numbers provided by Real Gold, without independently verifying the identities and contact details of the representatives of the customers; Citi did not seek direct confirmation from the customers in regard to their transaction amounts with Real Gold.
The SFC said its investigation found that the sponsor principals did not supervise the transaction team in the manner expected of them under the Additional Fit and Proper Guidelines for Corporations and Authorized Financial Institutions applying or continuing to act as Sponsors and Compliance Advisers.
The SFC's investigation also found that the due diligence work conducted on Real Gold's customers was handled by junior and inexperienced staff members of Citi with little supervision.
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