Hong Kong's securities regulator publicly censured Goldman Sachs on Tuesday for its conduct while advising local bank Wing Hang on its takeover by Singapore’s Oversea-Chinese Banking Corporation.
Goldman Sachs’s investment banking team failed to inform compliance of the start of OCBC's takeover offer for Wing Hang on September 16, 2013. As a result, Goldman Sachs's trades and research during the takeover breached sections of Hong Kong's Code on Takeovers and Mergers.
“Goldman Sachs’s conduct fell far short of the standards expected of a financial advisor,” Hong Kong's Securities and Futures Commission said in a statement.
Goldman Sachs said in response to the rebuke: “Upon becoming aware of the issue we immediately reported the matter to the SFC and undertook necessary remedial measures.”
OCBC’s acquisition of Wing Hang Bank for HK$38.7 billion, which it completed October 2014, marked the biggest acquisition of a Hong Kong-based bank since 2001 and was the largest cross-border Asia ex-Japan bank deal since the global financial crisis.
OCBC and its bankers also managed to see off activist hedge fund Elliot, which accumulated a 7.79% stake in Wing Hang and demanded a higher price from OCBC.
Immediately upon the verbal engagement of Goldman Sachs by Wing Hang Bank on November 8, 2013, Goldman Sachs was required under Rule 22 of the Takeovers Code to disclose its dealings in Wing Hang Bank securities during the offer period.
Between November 8, 2013 and January 6, 2014 Goldman Sachs executed 111 trades in the securities of Wing Hang Bank without making the requisite dealing disclosures. No prior consent was obtained as required for 26 of these trades.
Goldman Sachs also failed to comply with the restrictions on the issue and distribution of research reports in relation to what it published on Wing Hang Bank.
The SFC said that Goldman Sachs confirmed that no information was transmitted from the private side to the public side and that there was no personal account trading by Goldman Sachs staff in the securities of Wing Hang Bank.
The SFC said it took into account Goldman Sachs’s cooperation and self-reporting of the breaches.
