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Hong Kong regulator withdraws suit against UBS, Standard Chartered

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Hong Kong regulator withdraws suit against UBS, Standard Chartered

Hong Kong's Securities and Futures Commission has withdrawn its lawsuit against UBS Group AG and Standard Chartered Plc over market misconduct in the 2009 IPO of now-delisted China Forestry Holdings Co., The Wall Street Journal reported, citing sources familiar with the matter.

The SFC deduced that "its action against certain parties was probably time-barred," according to the Oct. 13 report, quoting a spokesman for the regulator. Such cases typically have a statute of limitations of about six years, the WSJ said in the report.

However, the banks may still face financial or other forms of penalties from the regulator, the sources said. The regulator's decision reportedly follows months of negotiations with UBS over potential penalties. Therefore, the banks may still face fines or other forms of penalties from the regulator, despite the dropping of the suit.

It was unclear whether the lawsuit against KPMG LLC, which was the auditor of the IPO, has also been dropped. KPMG has been alleged to have mishandled the Chinese company's US$216 million IPO.