China's Guotai Junan, Citic raided in Hong Kong crackdown on brokerages

Hong Kong’s Guotai Junan International (1788) on Thursday said securities authorities raided its offices this week, seizing documents and detaining an employee, amid the financial hub’s most high-profile regulatory crackdown in years.

The announcement came a day after Reuters reported, citing sources, that authorities raided Citic Securities (6030) unit CITIC CLSA linked to the handling of recent share sales.

CITIC CLSA declined to comment.

Guotai Junan said its employee was detained by the Independent Commission Against Corruption after a raid the body conducted on Tuesday with the Securities and Futures Commission.

The ICAC did not answer emails seeking comment. The SFC declined to comment.

Shares in Guotai Junan were down nearly 5percent in morning trade, while Citic’s Hong Kong-listed shares lost 3percent.

Bloomberg reported on Thursday investment firm Infini Capital Management was also “caught up in the sweep”. Reuters could not independently verify the report.

Tony Chin, founder of Infini Capital and the investment firm, did not reply to messages or emails from Reuters seeking comment.

The probes come after the SFC and the Hong Kong Stock Exchange raised concern about the quality of initial public offerings due to a surge in applications, telling investment banks to ensure applicants meet listing standards.

Investment banks have been instructed to reduce the workload each banker can take on and revise IPO applications, bankers and lawyers previously told Reuters.

It was not clear what wrongdoing the regulators have identified.

Hong Kong was the world’s top listing venue last year, with equity fundraising rising 164 percent to US$103 billion (HK$806 billion), stock exchange data showed. The jump was mainly driven by a sharp rebound in equity offerings by Chinese firms.

Reuters