China IPO Easing, ITT Wells Notice, Espirito Santo: Compliance
Sept. 22 (Bloomberg) — China will ease restrictions on initial public offerings by brokerages to aid them in their expansion plans as the government seeks to make domestic players more globally competitive.
The China Securities Regulatory Commission will scrap requirements that only brokerages with “good growth potential” and “relatively strong competitiveness” will be allowed to sell shares to the public, the watchdog said Sept. 19 on its official microblog. The regulator will also ease requirements on long-term investors in securities companies.
Chinese brokerages need fresh capital to fund new capital- intensive services such as securities lending and margin financing for clients. The regulatory body said May 29 it intends to “build modern investment banks” that are competitive and influential globally.
The regulator said it will stop approving applications for new operations by firms that failed to meet certain risk and liquidity requirements. The revisions are meant to encourage brokerages to replenish capital, the commission said on its microblog.
At least six securities firms, including Guotai Junan Securities Co., China’s third-largest brokerage by revenue, are awaiting approval to sell shares for the first time, according to filings posted on the regulator’s website.
Compliance Action
ITT Educational Gets Wells Notice From SEC on Student Loans
ITT Educational Services Inc., an operator of for-profit colleges, said it received a notice that the U.S. Securities & Exchange Commission may take enforcement action related to its loans to students.
Scrutiny of ITT Educational’s loan programs increased after accounting and disclosure issues were raised by an SEC review that began last year. The company is in discussions with the SEC and working to head off an enforcement decision by the agency, said Nicole Elam, an ITT spokeswoman.
“We worked with multiple leading independent experts in the field before making these accounting and disclosure decisions,” she said in a telephone interview. “We acted in good faith in making decisions on complicated issues.”
ITT Educational has also been placed on heightened cash monitoring by the Education Department and must disburse student funds before drawing federal Title IV money, the Carmel, Indiana-based company said Sept. 19 in a regulatory filing. It said it received the Wells notice from the SEC on Aug. 7.
Espirito Santo Swiss Demise Threatens Depositors Amid Probe
Swiss regulators started bankruptcy proceedings against a private bank affiliated with Portugal’s Espirito Santo family as the collapse of the financial empire threatens to ensnare depositors.
Banque Privee Espirito Santo SA was over-indebted, the Swiss Financial Market Supervisory Authority, or Finma, said Sept 19 in a statement on its website.
The bank can “rapidly and fully reimburse” deposits of as much as 100,000 Swiss francs ($107,000), which make up most of its accounts, the regulator said. Clients with larger deposits must wait for the bank’s liquidation to learn whether they will get their money back, Finma said.
Banco Espirito Santo SA, the publicly traded lender of the Espirito Santo empire, was forced to take a bailout last month after regulators uncovered potential losses on loans to other companies tied to the family and ordered the lender to raise capital.
Stephane Haefliger, a spokesman for Banque Privee Espirito Santo in Pully, Switzerland, wasn’t immediately available to comment.
Interviews/Commentary
NYSE’s Farley Says He’s Working to ‘Simplify’ Market
Tom Farley, president of NYSE Group Inc., talked about the outlook for the exchange and Alibaba Group Holding Ltd.’s initial public offering.
Farley commented how the “human element” makes the NYSE unique.
He spoke with Stephanie Ruhle and Erik Schatzker on Bloomberg Television’s “Market Makers.”
For the video, click here.
–With assistance from John Lauerman in Boston, Cindy Roberts in Zurich, Anabela Reis in Lisbon and Aipeng Soo in Beijing.
To contact the reporter on this story: Carla Main in New Jersey at cmain2@bloomberg.net To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Charles Carter, Sophia Pearson
