Crackdown on banks gives Hong Kong an IPO edge

Hong Kong

IT may have taken a while, but Hong Kong finally showcased an investor-protection edge. The financial regulator banned UBS from leading market debuts for a year, and the Swiss bank and three of its peers will pay US$100 million in fines for shoddy due diligence on initial public offerings (IPOs) stretching back to 2009. As bourses battle to host the next wave of unproven startups, the city's aegis provides a bit of extra comfort.

Because of strict capital controls on the mainland, Hong Kong has been a choice destination for Chinese companies to raise money offshore. Providing safeguards through enforcement action can be tough, however, because of the different legal systems.