CITIC Securities and Guotai Junan Embroiled in Scandal, Received 4 Million to Help Facilitate Insider Trading Earning 300 Million

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Source: Huajiao Finance

Big Event!

Yesterday, the Hong Kong Independent Commission Against Corruption (ICAC) issued a statement confirming that senior executives from two Chinese-funded securities firms and one hedge fund management company were taken action against for suspected insider trading and corruption.

Further details from Caixin reveal that the two Chinese securities firms are CITIC Securities and Guotai Junan International.

Guotai Junan International also had an employee taken away. Caixin reports that the person taken was Pan Jubing, head of the ECM (Equity Capital Markets) at Guotai Junan Hong Kong.

Multiple media outlets also reported that Pan Jubing was taken from his home by ICAC.

Early morning on March 12, Guotai Junan International announced the matter itself. Later that evening, its parent company, Guotai Haitong, listed on the A-share market, also issued a statement confirming the incident.

CITIC Securities also issued a statement on March 12, acknowledging that an employee of its subsidiary had been questioned by ICAC.

01

Employees of Guotai Junan International and CITIC Securities involved

On the evening of March 11, Caixin published an exclusive report stating that at least two Chinese-funded securities firms were raided by Hong Kong ICAC, possibly related to stock allocation issues.

The report states that the offices of Guotai Junan Hong Kong and CITIC Securities Hong Kong were raided by ICAC, with Pan Jubing, ECM supervisor at Guotai Junan Hong Kong, being taken away and detained.

Public information shows that Pan Jubing previously served as Managing Director and Head of Capital Markets at Guotai Junan International, mainly responsible for underwriting projects, including IPOs, secondary market placements, convertible bonds, and block trades.

He has extensive experience with Hong Kong IPO projects, including well-known companies like CATL, UBTECH, and Mao Geping, as well as multiple US-listed projects. The number of placements he participated in is even larger.

On March 12, ICAC also announced that on March 10 and 11, they conducted a joint operation codenamed “Trigger” with the Hong Kong Securities and Futures Commission (SFC) to combat insider trading and related corruption.

During the operation, ICAC and SFC officers searched 14 locations and arrested 8 people—6 men and 2 women, aged between 35 and 60.

ICAC also disclosed that among those detained were senior personnel from two licensed securities firms and one hedge fund.

Interestingly, the raid by ICAC and SFC took place on March 10, but Caixin made this public on March 11, and the involved parties disclosed the incident on March 12.

Early morning on March 12, Guotai Junan International announced that on March 10, SFC and ICAC executed search warrants at the company’s main Hong Kong offices and seized some documents. One employee was detained by ICAC.

Guotai Junan International stated that on March 10, the employee’s operational and authority rights were suspended.

Later that evening, Guotai Haitong, listed on the A-share market, confirmed that one employee of Guotai Junan International had been taken away by ICAC for investigation. The company emphasized that it is paying close attention to the situation.

On the evening of March 12, CITIC Securities, which had remained silent, announced that SFC and ICAC had visited its Hong Kong subsidiary with search warrants and seized some documents. An employee of the Hong Kong subsidiary had been questioned by ICAC.

02

Possible bribes exceeding 4 million yuan involved in insider trading

According to ICAC disclosures, senior officials from the involved licensed securities firms are suspected of accepting over 4 million yuan in bribes from the owner of a hedge fund to obtain confidential information about stock placements of several Hong Kong-listed companies before the information was made public.

To make it clearer, ICAC even disclosed the details:

After the hedge fund received insider information about stock placements from the securities firms, they shorted the relevant stocks in the market, establishing short positions. When the stock placement news was announced, the stock prices dropped, allowing the hedge fund to profit from the short positions.

It is reported that the hedge fund made profits of up to 315 million yuan.

ECM is a core front-office business department of securities firms, mainly responsible for connecting corporate equity financing needs with capital market funds. Simply put, helping companies raise funds through stock issuance and connecting with various investors to complete fundraising.

Compared to traditional investment banking, ECM focuses on key issuance stages such as pricing, roadshows, and placements. Therefore, they have access to many confidential information about Hong Kong-listed companies’ stock placements in advance.

By 2025, with a hot Hong Kong IPO market and tight new stock allocations, some institutions might resort to secretly bribing ECM staff to secure allocations.

In the cases involving these securities firms, ECM personnel are key players in leaking insider information and benefiting from it.

Originally supposed to adhere to compliance, these key personnel have become central participants in insider trading.

03

Facing heavy penalties

ICAC stated that this joint operation originated from an investigation by the SFC into suspected insider trading, which later uncovered possible corruption, leading the case to be transferred to ICAC for further investigation.

Currently, the SFC is also focusing on investigating insider trading and other misconduct under the Securities and Futures Ordinance.

In Hong Kong, insider trading is a serious crime.

The Securities and Futures Ordinance in Hong Kong has detailed regulations on insider trading.

Once convicted through prosecution, penalties can include fines of up to 10 million HKD and imprisonment for up to 10 years. Convictions under summary procedures can result in fines of up to 1 million HKD and up to 3 years in prison.

In other words, once convicted of insider trading, penalties range from a fine of 1 million to 10 million HKD and imprisonment from 3 to 10 years.

Additionally, those involved may face restrictions on their business activities or bans from practicing.

Of course, a major difference from Mainland China is that relevant institutions and senior executives can also be penalized.

The Ordinance stipulates that every senior management member of a corporation must take all reasonable measures to ensure proper preventative procedures are in place to prevent the corporation from engaging in market misconduct.

Wind data shows that from 2025 to March 12, 2026, Guotai Junan Hong Kong’s subsidiary participated in underwriting 11 IPOs, including CATL, Zhipu, Cambridge Technology, Woan Robotics, and others.

Among Hong Kong’s equity underwriters, Guotai Junan Hong Kong ranks 11th.

CITIC Securities Hong Kong subsidiary has participated in underwriting 35 companies since 2025, including Muyuan Foods, Zijin Gold International, Lens Technology, Sany Heavy Industry, and more.

The recent scandal is not good news for Guotai Haitong and CITIC Securities, both of which are aggressively expanding their international business.