Involving HK$315 million insider trading, Hong Kong's Independent Commission Against Corruption "raids" Chinese-funded investment bank, takes away 6 men and 2 women

【Text / Yushan Guanjin Studio】

On March 12, according to the Hong Kong Independent Commission Against Corruption (ICAC) website, the ICAC and the Hong Kong Securities and Futures Commission (SFC) conducted a joint operation codenamed “Firing Line” from March 10 to 11, targeting a case involving corruption and insider trading. Several senior executives from two securities firms and one hedge fund management company were involved and became subjects of investigation.

During the operation, law enforcement officers searched 14 locations, including offices and related residences of the two securities firms and the hedge fund management company. A total of six men and two women, aged between 35 and 60, were arrested.

The ICAC believes that a senior executive of the involved securities firm is suspected of accepting bribes of over HKD 4 million from the head of the hedge fund management company, in exchange for leaking confidential information about the stock allotments of multiple Hong Kong-listed companies. Based on this information, the hedge fund established short positions on the relevant stocks, profiting from short selling and short stock swap contracts. After the allotment information was announced, the stock prices dropped, and the hedge fund reportedly made a profit of approximately HKD 315 million.

The announcement also states that the joint operation was initiated following an initial investigation by the SFC into suspected insider trading activities, during which potential corruption was uncovered. The case was then transferred to the ICAC for corruption-related investigation, while the SFC continued to investigate insider trading and other misconduct. Both authorities stated that they would not comment further at this stage as the investigation is ongoing.

On the same day, Guotai Junan International issued a statement on the Hong Kong Stock Exchange, confirming that the SFC and ICAC searched the company’s main business premises in Hong Kong, and one employee was taken from his home and detained.

The announcement said that on March 10, the SFC and ICAC executed search warrants at the company’s main business locations in Hong Kong 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 closely monitor its development. Due to the ongoing investigation, the company immediately suspended all operational and executive 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, likely due to suspected insider trading or other illegal activities related to personal misconduct, and not related to the previously circulated online rumors about his involvement in investment banking.

On March 11, Caixin reported, citing sources, that Pan Jupeng, head of the Equity Capital Markets (ECM) division at Guotai Junan Hong Kong, was taken into custody for investigation. Another firm, CITIC Securities Hong Kong office, was also raided, but no one was detained.

According to available information, the ECM department of investment banks mainly assists companies with equity financing, including initial public offerings (IPOs), secondary offerings of listed companies, and convertible bond issuances, playing a core role in issuance and underwriting in the capital markets.

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