RHB Investment Bank fined RM350,000 for IPO listing breaches

BURSA Malaysia Securities Bhd has publicly reprimanded and fined RHB Investment Bank Bhd (RHB IB) RM350,000 for two breaches of listing requirements related to an initial public offering (IPO) on the ACE Market.

The first breach involves RHB IB’s failure to conduct proper due diligence as a sponsor and principal adviser for the IPO.

The second breach is related to the bank’s failure to promptly inform Bursa of material developments concerning the applicant’s business.

In the due diligence breach, RHB IB did not make adequate inquiries to ensure there were no misstatements or material omissions in the IPO application and draft prospectus.

This resulted in a material omission regarding the applicant’s financing arrangement with its major suppliers and the credit risk associated with it.

The regulator found that there was an inadequate assessment by RHB IB of the applicant’s internal controls and risk management systems, particularly in managing credit risk.

Additionally, there were numerous shortcomings in the draft prospectus, leading to its rejection by Bursa Malaysia Securities.

RHB IB only disclosed the material information when queried by Bursa, and an enhanced credit risk policy was implemented after the fact.

Similarly, for the second breach, RHB IB only notified Bursa of material developments when questioned.

This is not the first time RHB IB has breached listing requirements, and the regulator’s decision to reprimand and fine the bank takes into account previous breaches.

In addition to the fine, RHB IB must review its internal policies and procedures related to its role as an adviser/sponsor for submissions to Bursa Malaysia Securities.

Bursa Malaysia Securities noted the importance of sponsors and advisers maintaining high standards of integrity, accountability, and responsibility in assessing the suitability of IPO applicants for admission to the ACE Market.

The regulator called for vigilance in ensuring quality, proper due diligence, and a thorough review of applications and prospectuses before submission. – TMR / pic TMR FILE