Hong Kong’s anti-corruption and securities regulators have arrested eight people in connection with an alleged HK$315 million insider dealing and bribery scheme, according to multiple media reports. The case involves a hedge fund and staff at two brokerages.
The Independent Commission Against Corruption (ICAC) and the Securities and Futures Commission (SFC) said in a joint statement that the operation, codenamed “Fuse,” targeted senior executives suspected of leaking confidential information about share placements by Hong Kong-listed companies in exchange for more than HK$4 million in bribes. Investigators allege the hedge fund manager used the non-public information to conduct short selling ahead of placements, generating illegal profits of about HK$315 million.
The authorities described the action as one of the largest joint operations between the ICAC and SFC in recent years. While the regulators did not name the firms, Guotai Junan International Holdings said the ICAC and SFC searched its Hong Kong office on Tuesday, seizing documents, and that an employee had been detained and immediately suspended.
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Guotai Junan said in a stock exchange filing that its board was not implicated, that overall business and operations remained normal, and that it remained financially sound, but advised shareholders and potential investors to exercise caution when dealing in its shares. The company is a subsidiary of Guotai Junan Securities and is one of the most active initial public offering sponsors in Hong Kong.
Officials and market participants said the case underlines Hong Kong’s determination to safeguard market integrity at a time when the city is seeking to attract more listings and capital. An adjunct professor at City University quoted in local media said the operation sent a “very strong message” that insider dealing and corrupt practices around placements and new listings will not be tolerated in an international financial centre.
Separately, Citic Securities disclosed that regulators had searched its Hong Kong office and made enquiries with an employee.
