Goldman Censured by Hong Kong Regulator Over Wing Hang Dealby
Asia unit executed trades without making requisite disclosures
Goldman had advised Wing Hang on its takeover by OCBC
Goldman Sachs Group Inc.’s Asia unit was censured by Hong Kong’s securities regulator for breaching the city’s takeovers code while advising Wing Hang Bank Ltd. on its acquisition by a Singaporean lender.
Between Nov. 8, 2013, and Jan. 6, 2014, Goldman Sachs (Asia) LLC executed 111 trades in Wing Hang securities without making the requisite dealing disclosures and no prior consent was obtained as required for 26 of those trades, the Securities and Futures Commission said Tuesday in a statement. Goldman Sachs also failed to comply with restrictions on issuing and distributing research reports related to Wing Hang, the regulator said.
The SFC considers the breaches “to be serious and to merit the present disciplinary sanction,” it said. “The breaches suggest a significant breakdown in the compliance policies and procedures of Goldman Sachs in relation to takeovers in Hong Kong.”
Goldman Sachs, based in New York, reported the matter to the the regulator after it became aware of the issue, Connie Ling, a spokeswoman in Hong Kong, wrote in an e-mail. The firm had conducted an internal review and has enhanced its internal controls, she said.
Oversea-Chinese Banking Corp. offered $5 billion in April 2014 to acquire Wing Hang, one of Hong Kong’s last remaining independent lenders. Goldman Sachs, Citigroup Inc., KPMG and Nomura Holdings Inc. advised the target on the deal, while Bank of America Corp. and JPMorgan Chase & Co. advised OCBC, according to data compiled by Bloomberg.
Goldman Sachs was required to disclose its dealings in Wing Hang securities as soon as it was verbally engaged by Wing Hang on Nov. 8, 2013, the SFC said. Its failure to do so over the next two months was a result of its investment-banking team not informing its global compliance control room that an offer period for Wing Hang had started on Sept. 16, 2013, the regulator said.
The control room realized that the Hong Kong bank was in an offer period on Jan. 6, 2014, after which Wing Hang was put on a restricted trading list and all research coverage on the lender was suspended. Goldman Sachs analysts had issued four research notes since the offer period began, according to the SFC.
There was no personal trading by Goldman Sachs staff in Wing Hang’s securities in the November-January period, according to the SFC.
Goldman Sachs is the latest large international bank to be hit with an SFC action. The regulator fined JPMorgan units about $3.9 million for breaches by the firm’s institutional equities business, including breaking a ban on so-called naked short-selling. In August, the agency fined BNP Paribas SA’s local unit about $1.9 million for breaching rules that set out how its dark pool should operate.