Hong Kong’s anti-corruption agency arrested eight people after it joined forces with the market watchdog to raid 14 locations – including two securities firms and a hedge fund – in a two-day operation as part of insider-dealing cases worth HK$315 million (US$40 million), the two agencies said in separate statements on Thursday.
The Independent Commission Against Corruption (ICAC) arrested six men and two women, aged between 35 and 60, including senior executives and a middleman, but did not identify them by name.
The brokerage Guotai Junan International Holdings said in a filing to the Hong Kong stock exchange on Thursday morning that one of its employees was detained by the ICAC after the agency joined hands with the Securities and Futures Commission (SFC) to raid the company’s office and seize certain documents on Tuesday.
Guotai Junan International, a subsidiary of Guotai Junan Securities, did not identify the staff member, but said that the person was not a member of the board. The company suspended the employee on Tuesday.
Citic Securities also confirmed in a filing on Thursday night that the SFC and ICAC searched the office of its Hong Kong subsidiary and seized some documents. The brokerage added that an employee was “enquired” by the ICAC.
The joint action, code-named “Fuse”, took place on Tuesday and Wednesday, targeting insider dealing and corruption, as teams from ICAC and SFC searched 14 locations, including the offices of three financial firms and the homes of those arrested.
“It is suspected that senior executives of the licensed securities firms had accepted bribes of over HK$4 million from the owner of the licensed hedge fund management firm for disclosing confidential information regarding share placements of various Hong Kong-listed companies before such information was publicly announced,” the SFC’s statement said.
The regulators did not disclose the names of the securities firms and the hedge fund.
The commission said the confidential information helped the hedge fund to short the stocks and take profit when the share prices declined after the public announcements of the share placements. The hedge fund allegedly made a profit of HK$315 million, it added.
“The joint operation stemmed from the SFC’s initial investigation of the suspected insider dealing activities, which uncovered potential corruption,” the statement said. The SFC referred the case to the ICAC for corruption investigation while the commission focused on insider dealing.
The ICAC said the arrested individuals were suspected of breaking the law by accepting bribes and engaging in insider dealing under the Securities and Futures Ordinance.
Guotai Junan said in the filing that “the company attaches significant importance to this matter and will closely monitor the development”.
“The board confirms that, as at the date of this announcement, the group’s overall business and operations, including its investment banking business and all other business segments, continue to operate normally. The group remains financially sound, with all business activities being conducted in an orderly and compliant manner.”
Shares of Guotai Junan closed 4.2 per cent lower on Thursday at HK$2.51.
Guotai Junan is one of the most active IPO sponsors in Hong Kong and is also active in arranging share placements for companies.
The company was established in Hong Kong in 1993 and in 2010 became the first Chinese securities company to list in the city. The brokerage also has operations in Singapore and Vietnam, according to the company’s website.
Last year, Hong Kong-listed companies raised US$36.5 billion from share placements and other avenues, a four-year high and more than five times the amount in 2024, according to LSEG Data and Analytics. The number of deals stood at 356 issuances, the most since 2015. -- SOUTH CHINA MORNING POST
