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Citi fined HK$57m for failings as Real Gold IPO sponsor

Hong Kong

HONG KONG'S securities regulator said it had fined Citigroup's Asian business HK$57 million (S$9.75 million) for failings related to its discharge of duties as sponsor of the 2009 initial public offering (IPO) of Real Gold Mining Ltd.

The disciplinary action is the second in what is expected to be a series of measures by the Securities and Futures Commission (SFC) against banks for misconduct when sponsoring IPOs in the Asian financial hub.

The SFC said on Thursday that Citigroup Global Markets Asia had failed to conduct adequate and reasonable due diligence on Real Gold's customers. It also failed to properly supervise its staff when carrying out the sponsor work on the listing application, the SFC said. The due diligence on Real Gold's customers was done over the telephone by the most junior members of Citi's transaction team with little supervision, using phone numbers provided by the miner, without independently verifying customers' identities and details.

Trading in Real Gold's shares has been suspended since 2011. Citi said in a statement the resolution of the issue did not involve any licence suspension and "does not place any constraints on Citi's business activities or on any individual in Hong Kong or elsewhere". It added that "Citi cooperated fully with the SFC's investigation and has already taken appropriate action to ensure that it meets its legal and regulatory obligations at all times." REUTERS

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