Macquarie fined by SEC for underwriting breach

The US Securities and Exchange Commission on Friday said it laid charges against Macquarie Capital for underwriting a public offering "despite obtaining a due diligence report indicating that the China-based company's offering materials contained false information."

The SEC said Macquarie Capital "agreed to settle the SEC's charges by paying US$15 million and separately covering the costs of setting up a fund to compensate investors who suffered losses after purchasing shares in the public offering by Puda Coal."

The SEC said it had previously charged Puda Coal executives with securities fraud. The company is no longer in business.

The SEC also charged former Macquarie Capital managing director Aaron Black and former investment banker William Fang for failing to exercise appropriate care in their due diligence review.

Black agreed to pay US$212,711 and Fang agreed to pay US$35,000 to settle the charges, the SEC said.

The SEC said Macquarie Capital was the lead underwriter on a secondary public stock offering in 2010 by Puda Coal, which traded on the New York Stock Exchange at the time "and purported to own a coal company in China".

"In the offering documents, Puda Coal falsely told investors that it held a 90-percent ownership stake in the Chinese coal company.

"Macquarie Capital repeated those statements in its marketing materials for the offering despite obtaining a report from Kroll Associates showing that Puda Coal did not own any part of the coal company," the SEC said.