China regulator probe into law firm and broker sends 42 IPOs to limbo

China regulator probe into law firm and broker sends 42 IPOs to limbo

Following an investigation of a law firm, an investment bank, and other parties involved in the purchase and selling of shares, China's market regulator reportedly froze 42 initial public offers (IPOs) in Shenzhen and Shanghai.

Sources close to the matter broke the news of the stalled IPOs, citing disclosures by exchanges and business filings. It stated that the China Securities Regulatory Commission (CSRC) begun an investigation into Beijing-based law firm Tian Yuan, China Dragon Securities, Zhongxingcai Guanghua Certified Public Accountants, and Carea Assets Appraisal Co. Ltd.

The halts coincide with a broader curb on China's private sector that shook financial markets. This year, regulators tightened rules on initial public offerings (IPOs) as companies sought to raise funds after a rapid economic rebound and earlier regulatory streamlining.

The market regulator mentioned that it will "strictly supervise the admission to the capital market" and will have "zero tolerance" for market misconduct.

Chinese electric car manufacturer BYD’s chip unit was one of those affected by the halt. BYD Semiconductor filed to list on Shenzhen’s Nasdaq-style ChiNext board in May intending to raise at least 2.68 billion yuan (USD 413 million).

The firms hit by the move expressed they would evaluate the procedure in hopes of resuming listings. Regulations specify that after the investigations are concluded, bourses can resume a company's listing application if the exchange is notified within three months.

Last month, China's largest ride-hailing company Didi Chuxing, had to remove its apps from the country's App stores following a cybersecurity investigation sparked by concerns about user data privacy. The move came two days after the business raised USD 4.4 billion in its first public offering in the United States, causing shares to plummet soon after the news, sources cited.

The companies involved in the investigation remain tight-lipped, and the market regulator has not yet revealed any details regarding the probe.

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