(Yicai) Oct. 14 -- Shares in China International Capital Corporation plunged by the exchange-imposed limit today after the firm, which is one of the country’s largest investment banks, said that it is being investigated for its role as sponsor to the failed 2021 initial public offering of chipmaker S2C, which was found to have submitted fraudulent information.

CICC’s share price [HKG: 3908] closed down 3.9 percent at HKD14 (USD1.80) in Hong Kong, while its Shanghai-traded shares [SHA:601995] slumped 8 percent to finish the day at CNY35.99 (USD5). Earlier in the day both stocks sank as much as 10 percent.

The securities watchdog has opened a case against CICC as it suspects that the company did not exercise due diligence as an underwriter to Shanghai-based S2C’s IPO, the Beijing-based firm said on Oct. 11.

S2C was fined CNY4 million (USD564,952) in February for inflating its 2020 profit by 118.4 percent and its revenue by 11.5 percent in its IPO application materials. It has been banned from applying to go public for the next five years. The chairperson at the time and five other executives were fined a combined CNY14.5 million (USD2 million).

S2C is the first IPO applicant to the mainland bourses to be penalized even though it withdrew its filing.

The China Securities Regulatory Commission has been cracking down on the disclosure of false information in IPO applications, and the brokers involved are being held responsible.

This is not the first time that CICC has been in hot water with regulators. The company has been fined and cautioned multiple times since the start of the year. Breaches include non-compliant operation of asset management accounts, hiring unqualified staff to work in securities, breaking stock trading rules, unsound salary management as well as running an unrefined internal governance system.

PricewaterhouseCoopers China was fined an eyewatering CNY440 million (USD62.1 million) by Chinese regulators earlier this year for its role in property developer Evergrande China's financial fraud, and all illicit gains were seized. PwC China was also banned from operating for six months and its Guangzhou branch's business license was revoked.

Editor: Kim Taylor