Hong Kong Securities and Futures Commission and Independent Commission Against Corruption: 2 Securities Firms and 1 Hedge Fund Executive Suspected of Insider Trading and Corruption, Illegally Disclosed Hong Kong-Listed Company Rights Issue Secrets in Advance

Daily Economic News Reporter | Huang Wanyin Daily Economic News Editor | Chen Junjie

On March 12, the Hong Kong Securities and Futures Commission (SFC) and the Independent Commission Against Corruption (ICAC) jointly announced that they would conduct a joint operation on March 10 and 11, 2026, to crack down on senior executives of licensed institutions suspected of insider trading and corruption. The operation involved two securities firms and one hedge fund. The ICAC detained a total of six men and two women, aged between 35 and 60, including senior managers from two licensed securities companies and a licensed hedge fund management company, as well as an intermediary.

During the operation, personnel from the SFC and ICAC searched a total of 14 locations, including offices of licensed institutions and the residences of the suspects.

The SFC and ICAC suspect that senior managers of licensed securities firms accepted bribes exceeding HKD 4 million from the owner of a licensed hedge fund management company in exchange for disclosing confidential information about the share placements of various Hong Kong-listed companies.

Using this confidential information, the licensed hedge fund management company engaged in short selling these stocks or entered into equity swap contracts to establish short positions for its hedge funds. When the companies announced their share placements publicly, the stock prices dropped, and the hedge funds reportedly profited approximately HKD 315 million from their short positions.

This joint operation originated from an initial investigation by the SFC into suspected insider trading activities, during which potential corruption was uncovered. The investigation is ongoing.

The announcement did not specify the names of the involved securities firms or hedge funds. However, on March 12, Guotai Junan International issued a statement saying that on March 10, the SFC and ICAC visited the company’s main Hong Kong office to execute search warrants and seized some documents. The company also learned that an employee (not a board member) was detained by the ICAC. The company has immediately suspended all operations, duties, and powers of the involved employee.

According to reports by Daily Economic News, sources familiar with the matter revealed that the employee was taken from his home by the ICAC, possibly due to suspected insider trading or other illegal activities, and not related to the previously circulated online rumors about his involvement in investment banking activities.

Cover image source: Daily Economic News