Watchdog to probe China Life's share sale after US action

The SFC says it will help its American counterpart, which is seeking documents

The US$3.5 billion initial public offering of China Life Insurance is being investigated by the Securities and Futures Commission, the regulator has announced.

In a rare move, the SFC confirmed it was 'making inquiries into the circumstances of the listing of China Life' less than 24 hours after the company said it had received notification of an informal inquiry by the United States Securities and Exchange Commission.

China Life has been asked by the US regulator to hand over documents and information as part of an inquiry into its offering in December last year. The insurer said it received notification through its US lawyers and intended to co-operate fully with the investigation.

The SFC is also assisting the US regulator in its inquiry. The Hong Kong securities watchdog generally does not comment on continuing investigations. It said it made the announcement yesterday 'in order to maintain and promote confidence in the Hong Kong securities and futures industry'.

China Life's massive offering has been tainted by the findings of a routine probe into its parent by China's National Audit Office. The parent was ordered to pay 67.49 million yuan in unpaid taxes and fines last month after accounting irregularities and rogue investments were uncovered at the state behemoth.

A number of class action lawsuits have since been taken out in the US against the life insurer for allegedly failing to adequately disclose 'massive financial fraud to the tune of US$652 million' at the unlisted parent, based on the national auditor's findings.