Hong Kong authorities arrest eight in insider trading probe into hedge fund, brokers
The firms were not named, but sources familiar with the matter identified CLSA, a unit of Citic Securities, and hedge fund Infini Capital among those implicated.
A general view of the skyline in Hong Kong. (File photo: Reuters/Tyrone Siu)
HONG KONG: Hong Kong authorities said on Thursday (Mar 12) they had launched an insider trading probe into two brokerages and a hedge fund, and arrested eight people in their biggest crackdown on the financial industry in recent years.
The announcement did not name the firms, but brokerage Guotai Junan International said in a statement it had been raided this week.
Sources familiar with the matter identified CLSA, a unit of Citic Securities, and hedge fund Infini Capital as the other firms.
The sources were not authorised to speak to the media and declined to be identified.
Citic Securities, in a filing to Shanghai Stock Exchange, confirmed its Hong Kong subsidiary, without naming it, was probed on Tuesday with some documents being taken and one staff member questioned.
The company said it was paying "high attention" to the matter and will closely follow developments, adding that the subsidiary was operating normally.
Citic and Guotai Junan's parent firm are China's two biggest brokerages.
Those arrested included senior executives, Hong Kong's Securities and Futures Commission and the Independent Commission Against Corruption (ICAC) said in a statement on the case, which involved share placements.
Both regulators declined to comment on the identities of the companies.
CLSA declined to comment. Tony Chin, who founded Infini in 2015, did not reply to Reuters requests for comment.
SFC's license record shows Chin has not been a responsible officer at Infini Capital since December 2025, meaning he cannot carry out regulated asset management services for Infini.
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Shares in Guotai Junan International closed 4.2 per cent lower, while its parent firm Guotai Haitong's Hong Kong-listed shares fell by the same amount. Citic's Hong Kong-listed shares lost 1.7 per cent.
The case, which comes amid boom times for Hong Kong equity offerings, is set to pile more pressure on IPO sponsors and share placement agents to do their due diligence. Authorities have previously warned brokers against submitting substandard work.
"A big tree has dead branches - Hong Kong’s IPO market is super hot again with valuations shooting up and more than 400 companies waiting to list," said Dickie Wong, an executive director at uSmart Securities.
SUSPECTED BRIBERY FOR INFO ON SHARE PLACEMENTS
The authorities said they believe that the owner of the hedge fund offered more than HK$4 million (US$511,000) in bribes in return for confidential information regarding share sales by Hong Kong-listed companies before the information was publicly announced.
When the share placements were publicly announced, the stock prices of the companies declined, and the hedge fund allegedly made profits of about HK$315 million from short positions, the statement said.
The authorities said their joint operation, code-named "Fuse", searched 14 locations including company offices and the residences of the six men and two women who were arrested.
Hong Kong was the world's top listing venue last year, with equity fundraising rising 164 per cent to US$103 billion, stock exchange data showed. The jump was mainly driven by a sharp rebound in equity offerings by Chinese firms.
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Infini has been an active participant in Hong Kong IPOs and share placements, backing several high-profile equity offerings, including those from AI companies SenseTime and Phancy Group, formerly known as Fourth Paradigm.
It also signed a strategic partnership last year with humanoid robot company Ubtech Robotics to provide up to US$1 billion in financing.
Chin, a former Morgan Stanley banker, serves as a significant shareholder and board member of a number of startups that have since grown into industry leaders, according to Infini's website. He also founded the Hong Kong Bulls, the only professional team based in the city to compete in China's National Basketball League.
