Hong Kong SFC, ICAC: 2 Brokerages Suspected of Bribery Exceeding 4 Million, Assisting Hedge Fund Profit of 3.15 Hundred Million, 8 Arrested

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On March 12, the Hong Kong Securities and Futures Commission (SFC) and the Independent Commission Against Corruption (ICAC) jointly announced a coordinated operation codenamed “Fuse” to combat a case involving corruption and insider trading. During the operation, multiple senior executives from two licensed securities firms and one hedge fund management company were implicated and became subjects of investigation.

During the joint operation, personnel from the SFC and ICAC searched 14 locations, including offices of licensed institutions and the residences of those arrested. The ICAC detained six men and two women aged between 35 and 60. Those detained include senior executives from the two licensed securities firms and the licensed hedge fund management company, as well as a middleman.

The SFC and ICAC suspect that senior executives of the licensed securities firms accepted bribes exceeding HKD 4 million from the owner of the licensed hedge fund management company in exchange for disclosing confidential information about share placements of multiple Hong Kong-listed companies (such information is considered inside information before public disclosure).

According to the announcement, after obtaining this confidential information, the hedge fund management company engaged in market activities such as short selling related stocks and/or entering into stock short-swap contracts to establish short positions. When the share placement was publicly announced, the stock prices declined, and the hedge fund is suspected to have profited approximately HKD 315 million from these 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 case was then handed over to the ICAC for corruption-related investigations, while the SFC continued to investigate insider trading and other misconduct.

As the investigation is ongoing, both the SFC and ICAC stated they will not comment further at this stage.

Before the market opened on March 12, Guotai Junan International (1788.HK) announced on the Hong Kong Stock Exchange that the SFC and ICAC had searched the company’s main business premises in Hong Kong, and an employee was detained.

Guotai Junan International stated that on March 10, 2026, the SFC and ICAC visited the company’s main business location in Hong Kong to execute search warrants and seized some documents. An employee who is not a board member was detained by the ICAC. The company attaches great importance to this matter and will continue to monitor developments closely. Due to the ongoing investigation, the company immediately suspended all operations, duties, and powers of this employee as of March 10, 2026, until further notice.

It is understood that the employee was taken from his home by the ICAC, possibly due to personal involvement in insider trading or other illegal activities, and not related to the previously rumored involvement in investment banking activities.

Industry analysts suggest that if the investigation concerns only the individual employee’s misconduct and not the company’s related violations, it should not impact the normal operations of the institution.

Guotai Junan International stated in its announcement that the company and the board confirm that as of the date of this announcement, the group’s overall business and operations, including investment banking, are functioning normally. The company’s finances are stable, and all business activities are conducted in compliance and in an orderly manner. The company is currently gathering further information regarding the investigation and will make additional disclosures in accordance with listing rules. Shareholders and potential investors are advised to act prudently when trading the company’s shares.

According to Dazhihui VIP, as of the close on March 12, Guotai Junan International’s stock price was HKD 2.51 per share, down 4.2%.

Reporter: Ding Xinqing, The Paper

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Editor: Liu Wanli SF014