[Regulatory Action] ICAC and SFC joint raids on 14 locations, arresting 6 men and 2 women. A fund profited HKD 315 million using insider information. Allegedly involved with CITIC Securities Hong Kong, Guotai Junan International, and Wuji Capital.

Market reports indicate that the Independent Commission Against Corruption (ICAC) and the Securities and Futures Commission (SFC) have launched a joint operation, “Fuse,” investigating CITIC Securities Hong Kong and Guotai Junan International (01788). Foreign reports suggest that Qian Tao’s Infini Capital has been involved.

The ICAC and SFC issued a statement at noon stating that on March 10 and 11, they conducted a joint operation targeting insider trading and corruption, resulting in searches at 14 locations, including licensed corporate offices and the residences of suspects. The ICAC also arrested six men and two women, aged between 35 and 60. Those detained include senior management from two licensed securities firms and one licensed hedge fund management company, as well as an intermediary. Authorities disclosed that a hedge fund profited approximately 315 million yuan through insider information.

Latest updates on March 12

The ICAC and SFC confirmed at noon that they are jointly investigating senior executives of licensed firms suspected of insider trading and corruption. The investigation involves high-level management from three licensed entities, including two securities firms and one hedge fund management company.

Authorities suspect that senior officials at licensed securities firms accepted bribes exceeding 4 million yuan from hedge fund managers, disclosing confidential information about stock placements in multiple Hong Kong-listed companies before the information was made public.

Using this insider information, the hedge funds shorted the relevant stocks or entered into stock short-swap contracts, establishing short positions on related stocks. After the stock placement news was announced, the stock prices fell, allowing the hedge funds to earn about 315 million yuan from their short positions.

This joint operation stems from an initial investigation by the SFC into suspected insider trading activities, which uncovered potential corruption. The case was subsequently handed over to the ICAC for corruption investigations, while the SFC continues to focus on insider trading and other violations under the Securities and Futures Ordinance. As investigations are ongoing, both the SFC and ICAC have declined to comment further.

It is worth noting that Infini Capital has experienced personnel changes in recent months, with Qian Tao resigning from his role as Responsible Officer at Infini Capital at the end of last year.

Guotai Junan International Confirms Employee Detention

Guotai Junan International announced this morning that on March 10, the SFC and ICAC visited the company’s main Hong Kong office to execute search warrants, seizing some documents. They also learned that an employee (not a board member) was detained for investigation. The company takes this matter very seriously and will continue to monitor developments closely.

Guotai Junan International stated that, in light of the investigation, all relevant employees’ operations, duties, and powers have been suspended immediately as of March 10 until further notice. The group’s overall business operations, including investment banking, remain normal, with stable financial health and compliant, orderly activities. The group remains committed to compliance and prudent management.

News on March 11

Bloomberg, citing sources, reported that Hong Kong authorities raided the offices of CITIC Securities Hong Kong and Guotai Junan International (01788) on Tuesday (March 10), and took at least one senior executive for questioning. Additionally, Caixin reported that at least two Chinese investment banks were searched this week, with Guotai Junan International’s ECM head, Samuel Pan, being taken away by the ICAC for assistance with the investigation.

According to LinkedIn, Samuel Pan joined Guotai Junan International in June 2015 and was promoted to Managing Director and ECM head in June 2024. Prior to that, he worked at Morgan Stanley as an analyst and manager, accumulating extensive investment banking experience.

The SFC declined to comment, and the ICAC has not responded to requests for comment; CITIC Securities Hong Kong and Guotai Junan Hong Kong also did not immediately respond.

Source: Guotai Junan International Announcement

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