【Regulatory Action】ICAC and Securities Regulators Raid 14 Locations, Arrest 6 Men and 2 Women; Funds Profited 315 Million Using Insider Information; Allegedly Involving CITIC Securities Hong Kong, Guotai Junan International, and Wuji Capital

Market reports indicate that the Independent Commission Against Corruption (ICAC) and the Securities and Futures Commission (SFC) have launched a joint operation to investigate China CITIC Bank International and Guotai Junan International (01788). Foreign reports suggest that Infini Capital, under Qian Tao, has been involved.

ICAC and SFC issued a statement at noon stating that on March 10 and 11, they carried out a joint operation called “Fuse” to combat insider trading and corruption. They searched 14 locations, including licensed corporate offices and residences of suspects. ICAC also arrested six men and two women aged between 35 and 60. Those detained include senior management from two licensed securities firms and one licensed hedge fund management company, as well as an intermediary. Authorities disclosed that a hedge fund profited approximately HKD 315 million using insider information.

Latest updates on March 12

ICAC and SFC confirmed at noon that they are investigating senior executives of licensed firms suspected of insider trading and corruption. The investigation targets three licensed firms, including two securities companies and one hedge fund management firm.

Authorities suspect that senior officials at licensed securities firms accepted bribes exceeding HKD 4 million from hedge fund managers, disclosing confidential information about stock placements in multiple Hong Kong-listed companies before the information was publicly released.

With this insider information, the hedge funds shorted related stocks or entered into stock short-swap contracts, establishing short positions on these stocks. After the stock placement news was announced, the stock prices fell, allowing the hedge funds to earn about HKD 315 million from their short positions.

This joint operation originated from an initial investigation by the SFC into suspected insider trading activities, which uncovered potential corruption. The case was subsequently handed over to ICAC for corruption investigation, while the SFC continues to focus on insider trading and other violations under the Securities and Futures Ordinance. As investigations are ongoing, both authorities declined to comment further.

It is noteworthy that Infini Capital has recently experienced personnel changes; Qian Tao resigned from his role as Responsible Officer at Infini Capital at the end of last year.

Guotai Junan International Confirms Employee Detention

Guotai Junan International announced this morning that on March 10, the SFC and ICAC visited the company’s main Hong Kong office to execute search warrants, seizing some documents. They also learned that an employee (not a board member) was detained for investigation. The company takes this matter seriously and will continue to monitor developments closely.

Guotai Junan International stated that, in response to the investigation, all operations and responsibilities of the involved employee were immediately suspended on March 10 until further notice. The group’s overall business, including investment banking, remains operational and stable. The company maintains sound financial health and conducts all activities in compliance and order. The group continues to uphold strict compliance standards and prudent management.

News on March 11

Bloomberg, citing sources, reported that Hong Kong authorities raided China CITIC Bank International and Guotai Junan International (01788) offices on Tuesday (March 10), detaining at least one senior executive for questioning. Caixin also reported that at least two Chinese investment banks were searched this week, with Guotai Junan International’s ECM head, Samuel Pan, being taken away by ICAC for assistance in the investigation.

According to LinkedIn, Samuel Pan joined Guotai Junan International in June 2015 and was promoted to Managing Director and ECM head in June 2024. Prior to that, he worked at Morgan Stanley as an analyst and manager, accumulating extensive investment banking experience.

The SFC declined to comment, and ICAC has not responded to requests for comment. China CITIC Bank International and Guotai Junan Hong Kong also did not respond immediately.

Source: Guotai Junan International Announcement