A Hong Kong securities regulator censured the Asia unit of Goldman Sachs (GS) for breaking the Chinese city's takeover code while advising Wing Hang Bank on its acquisition by Singapore-based Oversea-Chinese Banking. Goldman Sachs (Asia) LLC made 111 trades in Wing Hang securities without making required deal disclosures, Hong Kong's Securities and Futures Commission (SFC) said in a statement that was reported by Bloomberg. Goldman didn't obtain prior consent as required for 26 of the trades and also didn't comply with regulations restricting the issuing and distribution of research reports concerning Wing Hang Bank. On Sept. 16, 2013, an offer period was announced for Wing Hang after its shareholders informed its board of directors that third parties had approached them about a possible sale of the entire company, the SFC said. Goldman's disclosures of its dealings in Wing Hang securities were required as soon as Wing Hang verbally engaged the New York-based lender on Nov. 8, 2013, the SFC said. Goldman failed to disclose the dealings for two months, due to the failure of its investment banking team not informing its global compliance control room about the beginning of Wing Hang's offer period on Sept. 16. Goldman's control room discovered that Wing Hang was in an offer period on Jan. 6, 2014, after the Hong Kong bank was put on a restricted trading list, the SFC said, adding that all research coverage on Wing Hang was suspended at that time. Goldman Sachs reportedly reported the issue to the Hong Kong regulator after becoming aware of it. No member of Goldman Sachs' staff personally traded in Wing Hang securities during that period, the SFC said. Oversea-Chinese eventually offered $5 billion to buy Wing Hang in April 2014, and the acquisition ultimately was consummated later that year. Goldman Sachs stock fell 5% on the stock market today. But Bank of America (BAC) and Citigroup (C) also fell about 5% on Tuesday as stocks sold off on a renewed dive in oil prices. JPMorgan Chase (JPM) lost 3.1%.
Goldman Sachs has been reprimanded by the Hong Kong regulator , the Securities and Futures Commission , after it breached takeover rules in a $ 5bn deal by publishing research and trading in the shares of a client it was advising . This marks the first public censure in Hong Kong of a large western bank for dealmaking , and will be seen as embarrassing for Goldman Sachs . The regulator said the bank 's conduct in the takeover of Wing Hang Bank , its client , by the OCBC " fell far short of the standards expected of a financial adviser " , adding that the " breaches suggest a significant breakdown in the compliance policies and procedures of the bank " .