May 27 - Hong Kong's securities regulator has carried out searches at the local operations of two major Chinese brokerages while probing suspected wrongdoing related to share offerings, according to sources with direct knowledge of the matter.
Officials from the Securities and Futures Commission (SFC) visited the Hong Kong offices of CCB International (CCBI) and China Securities International (CSCI) and removed certain documents and electronic devices as part of the continuing inquiry, the sources said. CCB International and China Securities International are the offshore arms of Beijing-headquartered China Construction Bank Corp and China Securities Co, respectively.
The individuals who provided details asked not to be named because they were not authorised to speak publicly. Spokespeople for the SFC and CSCI declined to comment on the searches, while CCBI did not respond to a request for comment.
It is not immediately clear which specific share offerings are the focus of this probe. The limited information available from the sources leaves unanswered questions about the timeline and the particular transactions under scrutiny.
The raids come as part of a wider regulatory push in Hong Kong, where a recent surge in initial public offering activity has drawn closer attention from authorities. That IPO wave propelled the city to the top of global fundraising rankings last year but also put pressure on banks and exposed weaknesses in due diligence and listing practices, according to commentary accompanying the regulatory actions.
Earlier this year the SFC mounted one of its largest enforcement campaigns in a decade, conducting raids that targeted at least two Chinese securities brokerages and a hedge fund, and leading to the detention of eight individuals. That operation followed warnings from the regulator that it had found "serious deficiencies" in stock market listing applications, prompting officials to stop some applications, increase scrutiny and order banks to reassess their procedures.
Hong Kong remains the most preferred offshore venue for Chinese issuers raising capital. In the first quarter, companies raised HK$109.9 billion, equivalent to $14.03 billion, through IPOs in the city, positioning it as the world's leading market for new share sales during that period.
As part of the latest investigation, SFC officers seized some documents and electronic devices from the two local brokerage offices, the sources said. The limited public disclosures leave the precise scope of the inquiry and any potential enforcement outcomes uncertain.
($1 = 7.8356 Hong Kong dollars)