Citigroup Global Markets Asia has been slapped with a 57m Hong Kong Dollar (£5.4m) fine over failures in its role as sponsor for the listing of a gold mine.
The Hong Kong Securities and Futures Commission (SFC) said today that it had reprimanded and fined Citi after an investigation into its role as sponsor for the listing application of Real Gold Mining.
The SFC found that Citi had failed to conduct adequate due diligence on Real Golds customers and had failed to properly supervise its staff when carrying out sponsor work on Real Golds application.
Chinese miner Real Gold owns three gold mines in Inner Mongolia.
The SFC found that Citis due diligence in connection with Real Golds customers was inadequate. It said that Citi conducted all customer interviews by telephone on numbers provided by Real Gold without independently verifying the identities or details of the customers.
It also found that the members of the transaction team carrying out the due diligence were too inexperienced and not properly supervised.
The SFC said that mitigating factors included this being the first time Citi's work as a listing sponsor had caused concern and that the breaches concerned a small part of the listing work and were partially based on a decision to focus on production issues rather then customers.
A spokesperson for Citi said: “Citi has agreed to resolve this legacy issue with the SFC relating to its work as sponsor to Real Gold Mining`s listing application in 2009. The resolution announced by the SFC today does not involve any license suspension and does not place any constraints on Citis business activities or on any individual in Hong Kong or elsewhere. Citi cooperated fully with the SFCs investigation and has already taken appropriate action to ensure that it meets its legal and regulatory obligations at all times.”