China’s Securities Regulator Investigates CICC for Alleged Due Diligence Failings in Chip Company S2C’s IPO Sponsorship

The Chinese securities oversight body is probing CICC regarding its backing of S2C's initial public offering (IPO). The investment bank is allegedly accused of neglecting to carry out the necessary due diligence in the cancelled offering, resulting in sanctions against S2C.

The market watchdog in China is conducting an investigation into China International Capital Corp (CICC), often likened to China's version of Goldman Sachs. This follows allegations that the investment bank didn't properly carry out due diligence in its role as the sponsor for a domestic chip firm's recent stock market debut in 2021, as stated by the bank on Sunday.

The China International Capital Corporation (CICC) has been informed of a case lodged by the China Securities Regulatory Commission (CSRC). The notice, received on October 11, alleges that the bank did not properly fulfill its obligations when sponsoring the initial public offering (IPO) of chip manufacturer S2C Limited. This information was shared by CICC in a document submitted to the Hong Kong stock exchange.

Tom Chan Pak-lam, the permanent honorary president of the Institute of Securities Dealers, explains that in China, when a regulator files a case, it indicates the initiation of an investigation. The China International Capital Corporation (CICC) reported that the China Securities Regulatory Commission (CSRC) decided to launch a case against CICC on September 25, following the securities law of mainland China and other relevant rules.

"CSRC's move against CICC is a clear signal to the market that the regulatory body is determined to maintain market integrity and quality even as it implements stimulus measures to revive the investment markets," stated Chan. "This is beneficial in building the trust of investors."

CICC has stated that it will fully collaborate with the relevant tasks of the CSRC, adhering strictly to regulatory requirements in terms of information disclosure, according to the document. They also said that the company's operations are currently proceeding as usual.